Safeguard Quality of Life for Children with Disabilities

There are 14.7 million children and adults with disabilities, but only a small fraction of their families have taken steps necessary to protect them from an uncertain financial future. At the same time, a reduction in government benefits and a longer life expectancy for the disabled mean more years of financial dependence and less money available to fill this need.

Families of children with disabilities often face a wide disparity between their needs and financial preparedness to care for loved ones, much due to a lack of education and knowledgeable financial advisor on the issues these families face. A child with disabilities may need your help for the rest of his or her life. Because you may not always be able to personally provide it, a plan for the future is critical.

All parents have hopes for their children's future. But when a child has a disability, a parent's concerns take on a special urgency. You worry about who will care for your child if you are no longer able to, and where he or she will live. You wonder whether he or she will have the resources to sustain a decent quality of life. The issues involved can be complicated, but you can create a plan that is both comprehensive and effective.

A Five-Step Plan

Consider this five-step plan to ensure that your child or grandchild receives the best care throughout his or her life:

1. Prepare a Letter of Intent.

A letter of intent is written by parents or other family members to describe the child's history, current status and what future the family hopes for him or her. It should cover such wide-ranging topics as housing/residential care, education, employment, medical history and care, behavior management, social activities and religious preferences, and it should be updated as this information changes. As much as possible, involve the child in preparing this letter, so that his or her preferences and hopes for the future will be represented.

While you are living, the letter can be used by lawyers and financial planners to help you draft a plan to ensure your wishes are carried out. If you are become unable to take care of your child, the letter gives future caregivers vital information on how to best meet his or her needs.

2. Choose guardians or advocates.

These people, most often family members, are selected to implement your letter of intent. An advocate is a nonlegal, usually informal position in which the chosen individual can assist the person with disabilities on almost any matter. Guardianship is a court approved legal relationship in which an individual is assigned a specific degree of responsibility for designated matters.

3. Determine the realistic cost of your plan and the resources available.

A financial planner experienced in working with families of children with disabilities can review your letter of intent and help you prepare a detailed financial analysis based on projected costs. You can then review together the resources available to fund your plan. These may include government benefits, your savings, assistance of other family members, your estate, inheritances from other relatives and friends, property, investments, military benefits and insurance.

4. Determine a funding plan.

If your child currently receives (or may one day need to depend on) government benefits, it is important to create a plan that will maintain his or her eligibility. (Government benefits can include health care, job training, supported employment, subsidized housing, transportation assistance and personal attendant care, as well as money.) Bequeathing a disabled individual assets worth more than two thousand dollars may eliminate their eligibility for many benefits. The rules of public assistance do allow family to provide some supplementary income and resources to the person with a disability, but the current level of benefits makes supplementation essential to a reasonable quality of life. The regulations are strict, however, so the most reliable way to leave an inheritance to your child with a disability and preserve his or her eligibility might be through a special needs trust.

There are two types of special needs trusts: testamentary trusts created upon the death of the parents and living trusts established while the parents are still living. Living trusts may offer several advantages:

- Families can start putting money into the trust now, as part of a long-term savings program.

- Using trust funds to pay for current expenses is a good tax recordkeeping method.

- Other relatives can gift money to the trust now and gain tax benefits.

- Supplementary assistance to the beneficiary will continue at your death, uninterrupted by any delays for probate and creation of a testamentary trust.

Whatever kind of trust you set up, it must be administered by a trustee, with the special needs person as beneficiary. The trustee has absolute discretion to provide whatever assistance is needed and trust funds must be used for supplementary purposes only.

5. Meet with all involved parties to discuss your plan, and review the plan at least once a year.

Professional help can make the task of ensuring your child's future security easier and more effective. Attorneys and financial planners experienced with families of children with disabilities can provide valuable expertise. Organizations that work with people with disabilities and their families can also provide assistance and advice. Working together, these professionals can help you address the concerns you have about the current and future needs of your family.