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How Special Needs Families Can Save Money and Plan for Their Financial Future

January 21st, 2014

Parents of a child with special needs know that there are many expenses for their child and sometimes seemingly not enough resources to attend to them. Financial planning is definitely more complicated for special needs families, but planning carefully and taking advantage of certain money-saving strategies can make the task easier. Here are ten suggestions for how special needs families can save money and plan for their financial future:
1. Remember to Take Care of Your Own Needs

The logic of the airplane oxygen mask applies here: flight attendants instruct parents to affix their own masks first before assisting a child, because you cannot help your child if you are not protected. Likewise, parents are not actually helping their child if they spend money incautiously on the child’s care without also doing the necessary planning for their own retirement. Special needs children are more likely to be at least somewhat dependent on their parents as adults, so it is a help to them for their parents to be financially secure in retirement.
2. Consult with a Financial Planner or Special Needs Attorney

All families can benefit from assistance with financial planning, and this is all the more true for families with special needs. Navigating the complexities of public benefits, taxation and estate planning is not something that should be attempted without guidance. Spending money really will save you money.

3. Make Use of Public Benefits

Many families with significant resources or with higher-functioning special needs children may balk at taking advantage of public benefits such as Supplemental Security Income or Medicaid. However, these benefits are not just for low income families. The programs represent one way our nation takes care of its citizens, including people with disabilities. Just as one would not hesitate to take advantage of any legal tax breaks available, so one should access any public benefits that one has the right to.

4. Create a Special Needs Trust

A special needs trust allow families to set money aside for a child’s special needs without giving the money directly to the individual, which would trigger disqualification for needs-based public benefits. Proceeds from a life insurance policy can be directed toward a special needs trust, and the funds can be used for such things as out-of-pocket medical expenses, personal care aides, education and recreation.

5. Plan Your Estate

Estate planning for special needs families should involve the whole family. Grandparents should be informed that leaving money directly to a special needs grandchild may adversely affect eligibility for public benefits and should therefore be directed to a special needs trust instead. Guardianship in the event of the death of both parents is particularly important and should include a care guide communicating a special needs child’s individual care needs and personal tastes.
6. Be Prepared to Advocate for Insurance Coverage

Treatments for children with special needs may or may not be covered by health insurance. For example, speech therapy should be covered, if the need is medical rather than behavioral. However, getting the insurance company to pay may involve careful and persistent communication with doctors, therapists, and one’s insurance provider. If your child needs respite care, be prepared to advocate for coverage.

7. Find and Make Use of Community Resources

Seek out any and all resources available for special needs families in one’s local community. Nonprofit organizations often provide their own resources or assist families in finding the help they need.
8. Coordinate with Other Special Needs Families

Families with special needs should not try to go it alone. Companionship with other special needs children can be supportive and fun for kids and parents can benefit by sharing resources. Group activities are more economical and provide crucial moral support for families.

9. Make Use of Tax Deductions and Credits

The Internal Revenue Code provides for several tax deductions and credit available for special needs families. Deductions may be allowable for medical and therapy expenses, specialized foods and legal expenses. Tax credits that are particularly useful for special needs families include the child and dependent care credit and the earned income credit. Consult a tax professional in order to make the most of these advantages.

10. Plan Ahead for Your Loved One’s Adulthood

Just as parents plan for their own retirement, so must they plan for their loved one’s life as an adult. Will the child remain living with the parents? If so, will in-home support be needed? If a young adult with special needs is planning to move into a group home or other independent living arrangement, then research should be done well ahead of time in order to be placed on any necessary waiting lists and to budget appropriately.

This post was first contributed by Marion Walsh to Friendship Circle.

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