Parents with special-needs children need to take special care when estate planning to insure their child will be provided for not only financially but also physically and emotionally. An article in Forbes by financial planner Christopher Young addresses these issues and suggests 4 financial planning considerations if you have a child with special needs.
“1. Do not make your special-needs child a beneficiary – naming them as a beneficiary in a will, retirement plan, insurance policy or other financial account may seem like the appropriate step to take, but it can have detrimental effects, including preventing the child from qualifying for federal benefits. Programs such as Medicaid and Supplemental Security Income (SSI) offer financial assistance to people with special-needs. However, to qualify for these programs, a special-needs person must have a limited amount of income and resources to their name. For example, to qualify for SSI, your child must have less than $2,000 in savings.
2. 529 ABLE Accounts – similar to 529 college-savings plans, these accounts will allow tax-free distributions if the dollars are used to pay for qualified expenses; including housing, employment training, assistive technology and personal support. ABLE accounts can hold up to $100,000 in assets without jeopardizing the beneficiary’s eligibility for federal benefits. Families can contribute up to the maximum gift exclusion each year, $15,000 for 2018. To qualify for an ABLE account, disability must have been occurred prior to your child’s 26th birthday.”
Read the full article: 4 Important Financial Planning Considerations If You Have A Child With Special Needs