One of the hardest issues in planning for a special needs child is trying to calculate how much money it’s going to cost to provide for the child, both while the parents are alive and after the parents die. Most parents we work with want to treat their children equally, but the special needs child probably needs far more protection and assets.
A recent Kiplinger’s article asks “How Much Should Go into Your Special Needs Trust?” As the article explains, a special needs trust, when properly established and managed, lets someone with a disability continue getting certain public benefits. Such trusts come in a variety of forms and can be created in a will or living trust or as a stand-alone document.
Even if the child isn’t now receiving any government benefits, families may still want the money protected from the child’s financial choices or those who may try to take advantage of them. A trustee can help manage the assets and make distributions to the child with special needs to supplement his lifestyle beyond what public program benefits provide.
A child with special needs can have multiple expenses, and the amount will depend on the needs and lifestyle of the family and the child’s capabilities. One of the biggest unknowns is the cost of housing. If the plan is for the child to live in a private group home situation, there are options. Some involve the purchase of a condo in a building with services for those with special needs. Many families also add into the budget eating out once a week, computers and phones, and other items.
When the parents pass away, this budget will need to increase because what the parents did for their child must be monetized.
Fortunately, public benefits can usually offset many of the basic costs for a child with special needs. For example, the child may be eligible for Supplemental Security Income (SSI), as well as a Section 8 housing voucher and SNAP food assistance. When the parents retire, SSI is typically replaced with Social Security Disability Insurance (SSDI), which is one-half the parent’s payment. When the parent dies, this payment becomes three-quarters of that amount.
Adult Family/Foster Care may be available. That will depend on the group housing situation.
The child may also be working and bringing in additional income (minus whatever benefits may be offset by this income).
It’s vital to do a complete analysis of the future costs to provide for a child with special needs so that parents can start saving and making adjustments in their planning right away.
The laws on special needs trust planning may vary from state to state, so be sure to contact an experienced elder law attorney.
Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”