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Financial Planning Challenges For Children With Special Needs

Financial Planning Challenges For Children With Special Needs

July 31, 2019

As the parent of a child with special needs, you face many unique challenges—increased medical expenses, highly specialized care, and the need for extra support. To top it all off, you constantly worry about what would happen to your child if you passed away. So how can you financially plan for these challenges and secure a sound future for your child? 

In this article, we’ll talk about steps you can take now to give your child the best life imaginable while also giving yourself peace of mind that they will be okay if something happens to you.  

Look Into Government Assistance

Do you qualify for government assistance? While some qualifications vary by state, here are two programs you should look into. 

Supplemental Security Income

Supplemental Security Income (SSI) is a federal income supplement program that provides cash to meet basic needs for food, clothing, and shelter. (1) If your child meets the Social Security Administration’s definition of a disability, then they may qualify for assistance. While your child is under age 18, Social Security considers all household income when determining eligibility. Once your child turns 18, benefits are calculated on his or her income alone. (2)


Medicaid is federally funded, but it’s administered and operated by the State (which means eligibility may vary from state to state). In most cases, if your child qualifies for SSI, they’ll qualify for Medicaid too. Medicaid funds can be used for healthcare expenses, home health services, medical equipment, and more. 

Save For The Future

529 ABLE

Even with government assistance, you may still have ever-growing out-of-pocket costs as you care for your child. A 529 ABLE account helps fill in this gap. 

529 ABLE plans, which are similar to 529 college savings plans, can be used for qualified disability-related expenses in addition to education-related expenses. These expenses may include housing, transportation, employment training, healthcare, and anything else needed to maintain your child’s quality of life. 

As of 2019, you can make an after-tax contribution of up to $15,000 per year into an ABLE account. (3) The money is withdrawn tax-free for qualifying expenses. As long as the account balance is below $100,000, it doesn’t count toward calculating SSI eligibility. 

Special-Needs Trust

For most high-net-worth families, opening an ABLE account is the first step in securing their child’s future. The second step is establishing a special-needs trust. Assets placed in this type of trust don’t interfere with your child’s ability to receive government assistance (as long as all assets list the trust as the beneficiary, not the child). 

If your child is named the beneficiary of assets totaling more than $2,000, they’ll no longer qualify for government assistance. Keep this in mind as well-intentioned family members or friends leave assets to your child. They’ll need to list the trust as the beneficiary in order for your child to remain eligible for benefits. 

Prepare For The Worst

Letter Of Intent

You know your child better than anyone. If anything were to happen to you, you’d want your friends and family to be aware of all those personal details. A Letter of Intent does just that. While this document isn’t legally binding, it does include incredibly helpful information, such as: 

  • Your child’s daily, weekly, and monthly routine
  • Your child’s personal likes and dislikes
  • Your hopes and dreams for your child
  • Your child’s medical history 
  • Contact information for doctors
  • Any other pertinent information

Adult Guardianship

Once your child is 18, they’re legally an adult in the eyes of the law. If you foresee your child needing guardianship beyond the age of 18 (because they’re unable to make their own medical and financial decisions), speak with a professional about how you can become their legal guardian. This process may include creating a power of attorney or healthcare proxy in the event of an emergency.  

Your First Step

As someone caring for a child with special needs, you deserve all the financial support you can get. At 1on1financial we welcome the opportunity to help you navigate through these complex financial issues and provide you with resources tailored to your unique situation. To get started, call our office today at 909-981-1720 or simply click here to schedule a free 15-minute introductory phone call!

About Philip

Philip A. Board MSFS, CFS, is a retirement planning specialist and the founder of 1on1financial, an independent comprehensive investment firm serving individuals and businesses throughout the United States. He is also the owner and CEO of Medi-cal Benefits.