Anyone raising a child knows how expensive it can be, but the cost of raising a child increases significantly if they have special needs. Caring for a child with an intellectual disability can cost parents as much as $2.4 million in the child’s lifetime! Such a significant financial undertaking requires careful planning, but all the planning in the world can’t stop life from happening. Should the unthinkable occur, what would your child with disabilities do without you? 67% of American adults don’t have a will, but creating an estate plan ensures a child with disabilities is adequately cared for, no matter what the future may hold.
Build Your Resources
Generating income to fund your estate is an essential first step. Insurance policies can help ensure your child has access to financial resources, even in unforeseen circumstances. Long-term disability insurance can protect your income if you ever have to stop working. Different types of life insurance can provide financial protection beyond your lifetime, like term life insurance or whole life insurance. Your child can receive benefits if you pass away, and a life insurance policy is a great way to fund a trust for your child.
Name Legal Guardians
The court system will assign guardians if you die without an estate plan while you have minor children. For a child with special needs, it’s especially important to make sure they have a responsible and loving caretaker. If you want a say in who that should be, you must name a guardian for your children in your will. Although you don’t legally have to notify the guardians, I believe estate planning always works better in the light of day. If the guardians you choose understand what you’re asking them to do and why they’ll be more likely to accept the responsibility. I also suggest naming backup guardians in case your first choice denies guardianship.
Write a Love Letter
When you create a will, it’s a public document that will undergo a court process called probate. But if you write a separate “love letter” for your children, you can provide guidance and messages in a private and intimate way. Your love letter can include practical things, like where your important documents are kept or a list of your account information for insurance policies and bank accounts. It can also have personal stories and advice. You can share your desire for your family to keep the annual road trip going. You can share how much you love your children and express what you hope the future holds for them. Encouragement for your children’s guardians can also be included. Children with disabilities often have a tough time processing death, so this small act may bring much-needed peace of mind to your kids and their guardians.
Create a Special Needs Trust
Special needs trusts are a powerful estate planning tool for parents to use. Most people name their kids as beneficiaries in their wills, but a lot of financial problems can happen if your child with special needs inherits a large sum of money. Government benefits can be taken away if a child with disabilities has assets that exceed a very small dollar amount. But if you leave an inheritance for your child through a special needs trust, the money isn’t considered their own, so it won’t affect the needs-based aid they receive. Your child’s legal guardians shouldn’t be given the money either—if they die, get sued, or run into other financial trouble, your child’s money can be lost.
Trusts can help supplement the care your child needs that their government aid can’t cover, such as a new van for transportation, personal aid, or recreational activities like vacations. An appointed trustee will oversee the terms of the trust, like when and how your child can receive money. Make sure to create a trust with an estate planning attorney who knows how to use the right language and terms to ensure your child has the resources they need to live a contented life. At Stone Arch Law Office, our team of established experts provide sound legal advice with a compassionate and honest approach as we guide families to make decisions they feel confident about.
For parents of special needs children, estate planning can provide the proper guidance, care, and financial support a child needs to live a long and happy life. Every parent only wants what’s best for their children, and estate planning is a key way to ensure your children have the best you can provide.
About Philip J. Ruce: As the estate planning director at Stone Arch Law Office, Philip J. Ruce oversees a team of talented and dedicated attorneys and staff who work hard to bring security and peace of mind to families. Philip entered private practice in February 2014 after six years as a trust and estate administrator. His education includes University of Minnesota (B.A.), William Mitchell College of Law (J.D.), and Thomas Jefferson School of Law with a Master’s of Law (LL.M.) in Wealth Management Law. You can learn more and connect with Philip at stonarchlaw.com.
