A Special Needs Child is Special – 5 Financial Steps
These 5 Financial Steps Will Help You to Plan for Your Special Needs Child
Planning for your child’s special needs can be a daunting task. Thankfully, there are 5 financial steps you can take to make the process go smoothly. These include preparing a will, setting up a special needs trust, opening an ABLE account, and creating a guardianship plan. Taking these steps now can help you protect your child’s future. Listed below are the steps to consider:
Prepare a will
One way to prepare a will for your child with special needs is to include a statement that clearly defines what your wishes are regarding the child’s special needs. A statement may include, for example, academic progress, mental retardation, or support. In addition to describing your wishes, you can also specify who will manage the child’s needs if something were to happen to you. A well-written will can make a huge difference to the child and his or her family in the event of your death.
One of the most important documents to include in your will is a list of medical providers and the medications your child is taking. You should also list significant family histories. The document should also specify any prepaid funerals or burials and any individual education plans. This list can be updated periodically. A copy of the document should be kept with your will and given to the guardian of your child. In the event that your child has a disability, this document is especially important.
Set up a special needs trust
Special Needs Trusts are set up to help protect the assets of a disabled individual and preserve governmental benefits. Medicaid and other government programs require a person to meet certain criteria before they can qualify for government assistance, and a special needs trust allows the disabled person to utilize their trust funds to cover those expenses while remaining eligible for such assistance. It is important to know how these trusts work to ensure that your loved one receives the care they need.
There are certain restrictions, however, on who can be named as the beneficiary of a Special Needs Trust. A disabled individual must be younger than 65 when the Trust is established and cannot work. In some states, it can be detrimental to the beneficiary to fund a Special Needs Trust after the child reaches an age of 65. You should consider these restrictions before establishing a Special Needs Trust for your child with special needs.
Open an Able Account
ABLE Accounts are savings accounts for disabled individuals that are tax advantaged. The account’s beneficiary is the owner of the account, and none of the earnings is taxed. Anyone can make contributions to the account, including family members, relatives, or friends. The maximum amount that can be contributed in 2022 is $16,000 and the funds must be with after-tax dollars, and is not tax deductible.
In addition to being a tax-advantaged savings account, ABLE accounts are also a way for people with disabilities to make payments for qualified expenses without jeopardizing their eligibility for government assistance programs. They can also be used along with a Special Needs Trust.
This limit does not affect the eligibility requirements for SSI or SSDI, which means that a person with a disability can save up to $100,000 in an ABLE account and still receive federal and state benefits.
One of the most appealing aspects of an ABLE account is its flexibility. It is similar to a state-run 529 college savings plan, allowing account owners to choose various savings strategies. While this allows for greater flexibility in saving, the ABLE Act limits account owners to two investment changes per year. However, if the owner chooses to use the money for anything other than qualifying expenses, it will be taxed at the regular rate.
Find financial assistance
Financial help is available in many forms. You can apply for housing vouchers through the U.S. Department of Housing and Urban Development or apply for food benefits through the Supplemental Nutrition Assistance Program, which provides money for groceries. You can also apply for financial help from your employment place, such as paid family leave. In addition, your church or community organization may offer respite care. Reaching out to agencies and advocacy groups can help you navigate the financial system and get advice and information on how to best care for your child with special needs.
You may qualify for government financial assistance for your child’s special needs. The Children’s Health Insurance Program (CHIP) is a federal program that provides health care coverage for children up to age 19. The benefits are paid out monthly to eligible families and do not require premiums. Other options include SSI (Supplemental Security Income), which pays for medical care for individuals under age 18. It can be challenging to navigate the system of benefits and programs, so it’s best to seek assistance from a local government, charity, or nonprofit.
Create a guardianship plan
It’s essential for families with a special-needs child to create comprehensive guardianship plans. These agreements can take time to complete, so if your child has multiple guardians, you’ll want to clarify the issue before proceeding. You may want to consider using a qualified New York guardianship attorney to help you navigate the process. Listed below are some tips to help you create an effective guardianship plan.
If you’re considering a guardianship of your child, you’ve likely already heard that you’ll have a high responsibility when it comes to caring for your child. Generally, you must act in the child’s best interest. If you are not comfortable creating a guardianship plan for your child, you can download a free workbook online. By doing so, you’ll make the process simpler and more effective.