Planning for Your Child’s Secure Future Starts...NOW!
It is never too early to start thinking about the finances needed to secure your child’s future. This issue is particularly important for parents who have children who are not able to live independently. A plan for funding is necessary to ensure housing and services that continue to provide a high quality of life.
Regardless of the severity of a child’s needs, planning provides peace of mind. Moreover, if your special needs child has neurotypical siblings, financial planning will also positively affect those siblings. The question of who will take on the caregiving responsibility later in life often looms large. Having flexibility and options can allow you and your family to approach those hard decisions with a greater measure of calm and confidence. These conversations, though can be difficult at times, are an imperative part of the planning process.
Here are some questions to consider as you begin to plan:
How should planning for your special needs child’s financial future affect your appetite for risk?
What financial strategies need to be in place to provide security for your child?
How should these strategies change over time?
What are the best ways to build wealth? And in what timeframe?
Ian Kansky is one of our recommended financial advisors that specialize in special needs trusts and planning for families of children with special needs. When asked, “how does a family fund a special needs trust?” his response was:
“The special needs trust is the ‘family bank’ for the care of the special needs child.
1. How much is needed in the trust?
(a) Enough to last the child’s lifetime.
2. How can these funds be made available to the trust?
(a) Assets can be left to the trust upon the parents’ death through a will and/or by naming the trust as a beneficiary of life insurance or retirement benefits.
(b) The trust can purchase life insurance on the lives of the parents. Life insurance is the ideal source of funds to meet these needs because it provides the money when it is needed most (i.e., when the parents pass away).
(c) Other family members can make contributions to the trust through gifts. Friends and family members should NOT make direct gifts to the child with special needs because that may jeopardize the receipt of public assistance.
3. How can funds be provided to other family members?
(a) Using life insurance permits other assets to be left to remaining family members. Life insurance can also act as an estate “equalizer.”
(b) Upon the death of the child, assets remaining in the trust may be distributed to other family members.
No matter what the family circumstances are, a well designed plan provides the parents with certainty that their special needs child, as well as the rest of the family, will be financially secure.”
This article is meant to stimulate conversations and planning among families and their trust advisors. Now is the time to start!
Please contact us with your questions.
Ian is a Financial Advisor: CExP with Strategies for Wealth and can be reached by telephone at (212) 701-7968 or email ian_kansky@strategiesforwealth.com.
Jonathan Gottlieb
Partner
195 Montague Street
14th Floor
Brooklyn Heights, NY 11201
Jonathan@GottliebFirm.com
(646) 820-8506