Financial planning for special needs family members is a real challenge for many families. According to Census statistics, roughly 21 million families in the United Sates are caring for an individual with special needs. Roughly one in every 26 families is raising a child with a disability.
Costs can be high, particularly as people are living longer and better because of improved medical and psychological care, increasing long-term costs for families. In addition, the number of American students enrolled in special education programs has increased by 30 percent over the last decade. Along with planning for their own health care and retirement needs, caring for special needs persons can be a burden on a family.
Proper financial planning is very important for those with special needs. Rising costs of health care, historical opportunities to transfer wealth free of taxes, limitations in eligibility for government benefits, and unemployment among parents caring for special needs children are all part of the picture.
Special needs trust can be a wonderful way to set funds aside to care for a loved one with special needs. Such trusts prevent selected funds from misuse and preserve the special needs person's eligibility for government benefits like Medicaid. To take advantage of the latter benefit, though, proper procedure must be followed to meet requirements and observe thresholds for government benefits. Failure to proper plan can put a special needs person at risk for eligibility for government aid which is means-tested when that individual turns 18.
In our next post, we'll continue this discussion.
Source: New York Times, "Financial Planning Calculators for Those with Special Needs," Ann Carrns, January 11, 2012.