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special needs kids

How to Help Clients With Special Needs Children


Part of offering comprehensive financial planning services to clients includes being prepared for the needs of as many people as possible. This includes clients who have special needs children. In his latest article, expert Bryce Sanders discusses trusts, guardianship and other aspects of financial and tax planning that are relevant to these clients.

Sep 13th 2021
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It takes a special parent to care for a child with special needs. Typically, these parents’ greatest financial concern is ensuring their children are cared for when they can no longer do so. As an accountant, you can help them plan their finances and point them in the right direction for helpful advice from other legal and financial professionals. 

According to a survey by the U.S. Department of Health and Human Services, 12.8 percent of children in the U.S. have special health care needs, while 20 percent of households include a child with special needs. The CDC estimates that 26 percent of adults in the U.S. have some form of disability. That’s 61 million Americans. The bottom line is that many of us are caring for a special needs child or know someone who is, and financial planners are no exception.

The Financial Aspects of Providing for a Special Needs Child

Providing for a special needs child can be expensive depending on the nature of the child’s disability or special need. One of the first steps for parents of these children should be establishing a special needs trust through an attorney with experience in this area. That way, the money to support and care for the child is available, but it is not in their name. While the federal government does provide benefits, one requirement is that the individual with special needs does not have their own money. 

Parents of special needs children often buy a substantial life insurance policy, designating the special needs trust as the beneficiary. This might be a situation in which a “second-to-die” policy makes sense. With this policy, both parents are listed as the insured, but it doesn’t pay out until both parents have died. Plus, the premium is often lower in this situation.

Parents should also have wills drawn up specifying that their assets are to go to the special needs trust. This ensures that the funds are available to support their child, yet the child is still eligible for government benefits since the trust is not in the child’s name.

The Human Aspects of Providing for a Special Needs Child

Someone needs to be representing the interests and rights of the child. It’s important to name a guardian early on in the child’s life in case something happens to both parents. The guardian’s role might end when the child turns 18, much like a parent’s responsibility legally ends at that time. But if the child’s disability prevents them from making their own decisions, the guardianship may be extended beyond that age. The guardian and their role need to be specified in important documents. While it’s tempting, parents should not assume that siblings or a kindly neighbor will look after their child when they’re gone.

The special needs trust will require a trustee who looks at the costs of care and pays the necessary bills. It might seem easiest to name one person as both the guardian and trustee, but that can lead to problems. It’s best to have two different people in each role, each representing the interests of the child.

What Are the Key Takeaways?

When your client has a special needs child, providing for the child’s long-term care should be addressed now, even if the need doesn’t seem immediate. The special needs trust will need to be funded, so your client should meet with their financial advisor and insurance agent to plan accordingly. Wills need to be written and updated, the trust needs to be documented, records of medical professionals involved should be made and other paperwork needs to be done. Your client should engage the services of qualified professionals experienced in working with families of special needs children.

As their accountant, you want to help them minimize taxes when setting up and funding the trust. Be mindful of the amount of assets held in the child’s name, so as to not endanger the receipt of government benefits. Remember that your role will likely be ongoing throughout the child’s life, especially if financial planning is a service you provide.

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