Financial and Estate Planning for Families with Special Needs Kids

Blog Posts

This month we’ve been discussing various issues related to estate planning, since October is National Estate Planning Month. In this week’s blog, we look at some of the unique financial and estate planning challenges faced by families with special needs children.

Logistical and Financial Challenges

Parents of children with special needs and disabilities face many challenges. This includes not only the logistical and time management challenges involved in getting their children the medical care they need, but also financial challenges due to paying the high costs associated with this care.

Even families with great health insurance benefits can face high out-of-pocket costs and co-pays related to medical and other care for their special needs kids. This makes it critical to conduct thorough long-term financial and estate planning to help ensure that the financial resources are available to provide the care that special needs children require — both now and for many years to come.

Put First Things First

The first thing to do is to make sure you’re receiving all of the government benefits you may be eligible for. This starts with Medicaid and Medicaid Waiver programs, which allow disabled and special needs individuals (both children and adults) to receive care at home or in their local community instead of having to travel long distances for the care they need.

Next, look into Supplemental Security Income (SSI) benefits through the Social Security Administration. SSI benefits are paid out to disabled individuals (both children and adults) whose income and resources fall within the Social Security program’s eligibility limits. These differ from state to state so check with your local Social Security office for limits in your area.

If your family’s income is too high to qualify for Medicaid or SSI benefits, check to see if you’re eligible for the Children’s Health Insurance Program (CHIP). This program, which is available nationwide, provides coverage for a wide range of costs related to caring for special needs children, including mental health counseling and prescription drugs.

Looking out longer term, Medicare benefits may be available to your adult special needs child when he or she reaches age 65 or has been receiving Social Security disability benefits for at least two years. In addition, there are two situations where disabled adults may be able to receive Medicare benefits sooner than this:

  1. If they need dialysis or a kidney transplant due to chronic renal disease
  2. If they have amyotrophic lateral sclerosis (or Lou Gehrig’s disease)

Consider a Special Needs Trust

Estate planning is usually especially critical for families with special needs children due to the fact that these children may need expensive care for their entire lives. One common strategy among these families is to establish a special needs trust.

This trust allows special needs or disabled adults to tap into trust assets during their lifetime without threatening their eligibility to receive government benefits based on their special needs. This helps ensure that adults with special needs receive the maximum amount of public assistance available, along with assets you’ve set aside specifically for the purpose of meeting their long-term care needs.

If you decide to establish such a trust, you should devise a strategy for funding the trust while you’re still alive. For example, you could have a certain amount of money transferred into the trust each month — this would be similar to having money automatically transferred into a retirement savings account each month. You could also make the special needs trust the beneficiary of a life insurance policy.

Look Into ABLE Accounts

In 2017, a new kind of tax-advantaged savings account was created specifically for disabled and special needs individuals who are able to earn income working. Achieving a Better Life Experience, or ABLE, accounts, enable such individuals to save up to $15,000 a year to help pay for qualified expenses. These include housing, education, healthcare, personal assistance services, employment training and transportation related to a disability.

Contributions aren’t tax-deductible, but earnings grow tax-free if the money is used to pay for qualifying expenses. Saving money in an ABLE account will not jeopardize a special needs or disabled adult’s eligibility for government assistance programs.

Start Planning Now

If you are the parent of a special needs child, it’s never too early to start planning for his or her long-term financial security. Please contact us if you have more questions about financial and estate planning for your special needs child.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier") investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.

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