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Financial Planning for Parents of Special Needs Children

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According to a recent survey conducted by MetLife, sixty percent of parents of special needs children don’t expect those children to be financially independent. However, 68% of those same parents haven’t written a will and 29% have not done anything to plan for their child’s future.  While it is understandable that many of these parents are so strapped for time that they haven’t done any significant financial planning, not knowing where to turn for help also presents an obstacle to financial planning for a special-needs child’s future.  The prospect of their special needs child surviving them is not one many feel comfortable discussing, but it is a subject that parents should embrace sooner than later.   One of the major barriers, apparently, is the lack of available specific financial planning information, according to 66% of the parents in the survey. The following statistics from the MetLife survey further confirm the absence of sufficient planning for these children:

  • 88% of parents who have children with special needs haven’t set up a trust to preserve eligibility of benefits such as Medicaid and Supplemental Social Security.
  • 84% haven’t written a letter of intent outlining an agreement for the future care of the child.
  • 72% haven’t named a trustee to handle the child’s finances.
  • 53% haven’t identified a guardian for their child.

estate planning for children

 Apparently, there is a great need for professional help in this area. The first step we recommend is to find an attorney who specializes in planning and legal matters for parents of special needs children.  These services would most likely include (but not limited to):

  • Drafting a letter of intent. This letter would provide instructions to your trustee and guardian as to how to care for your child. It would include a description of your child’s medical history, current needs and other important information needed by the caregiver in the event of the deaths of both parents.
  • Drafting a will to establish when and how your assets will be distributed. Without a will, your child would most probably have to wait for the end of a long probate cycle to affect the transfer of your assets.
  • Setting up a Special Needs Trust to manage the assets of the special needs child.  By distributing your assets to a trust, rather than directly to the child, you are also protecting your child’s eligibility for government benefits (assets in excess of$2,000 distributed to the child could make your child ineligible for those benefits).
  • Recommending a funding mechanism for the trust (Typically Life Insurance).

You would also need assistance from a reputable life insurance agent or broker to help you set up the correct insurance policy to fund the trust in the event of death. Joint Survivor or Second-to-Die life insurance is the insurance product generally used to fund a Special Needs Trust for a two-parent family.  The policy will pay the beneficiary (the trust, in this case) upon the death of the second parent. The trust will have instructions as to how and when the funds from the insurance policy should be distributed.  Also, life insurance policies are often acquired on each of the parents so that the financial burden on the remaining spouse would be eased in the event of one parent’s death.

The information provided in this article is not intended as legal advice. In these matters, you should definitely seek out an attorney and insurance broker who specializes in this type of planning. The Special Needs Alliance ( is an organization of about 100 attorneys specializing in planning for families with special needs children. We at can also recommend specialists in this field for you. has planning experts on staff to assist you with your life insurance needs. Contact us

(Technical assistance for the information contained in this article was provided by The Law Offices of Afshin A. Asher, with offices in Los Angeles, California.)



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