Differences Involved in Developing a Financial Plan for Special Needs Families
As mentioned, creating a special needs financial plan involves developing a plan for both the parents and the child with a disability. In many cases, the typical family does not include their grown children in their financial plan. In other words, these families do not intentionally try to leave an inheritance for their children. According to Natixis, an Investor Survey, only 40% of all families plan to leave their children an inheritance. These families may leave residual assets as a gift for their loved ones, but the main priority of their plan is to ensure their assets are sufficient to cover their own needs and expenses in retirement.
Special needs families, on the other hand, do intentionally plan to leave an inheritance for their child with a disability. Planning for the parents alone may involve looking 30 to 40 years into the future. When the lifespan of the child is included, the combined financial plan may look out 60 to 70 years in the future. Moreover, the special needs family has to ensure that sufficient funds are passed on at the death of the parents in order to provide for their loved ones in their retirement. Adding to the complexity of the special needs plan is the need to balance the goals and finances of both the parents and the child with a disability. In addition, careful consideration is needed to protect the assets and the public assistance benefits of the child with a disability. For example, special needs trusts are often a critical tool utilized to ensure the continuation of any public assistance benefits the child with a disability is entitled.
Finally, like the parent’s plan, all future expenses and future sources of income are considered in the creation of the child’s plan. Future income derived from Social Security, ABLE accounts, part-time work, and funds remaining in the Special Needs Trust all are important aspects of the child’s plan.
Putting together this type of plan involves a lot of educated guesses. Ultimately the special needs plan will need to be updated regularly. Despite the complexity and the guesswork involved, the special needs financial plan provides a necessary roadmap for the family in making planning decisions now and into the future. The reward for families in creating the special needs plan is peace of mind and confidence in knowing that their loved one will be provided for in the future.