We recently found out our 5 year old has a diagnosis that means they will potentially forever be dependent on us. They will likely be able to have a job, barring any unforeseen circumstances, but will be heavily reliant on my spouse and I financially and otherwise (due to a lack of executive functioning, at no fault of their own). There is a possibility that our child could shock us all and overcome the diagnosis in a way that wouldn't require them to be dependent on us but we would like to prepare for the future. Does anyone have children with disabilities that they are caring for and what has been your experience in terms of financial planning? TIA
Planning for the future with a dependent child
byu/AdAffectionate4602 inpersonalfinance
Posted by AdAffectionate4602
7 Comments
If it’s autism or permanent disability, there are multiple things you can do.
1. Able account – allows you to invest till 100k without impacting SSI when the child is 18.
2. Trust – you can create special needs trust
3. You can apply for Medicaid (depends on state) and if an eligible child gets free medical , dental insurance from the state on the top of employer based insurance. You won’t be paying deductible with this as Medicaid covers it.
Strongly suggest you look at a Special Needs Trust. Sit down with professionals now. This is not a time or place for Reddit suggestions. If you think a professional is expensive wait until you find out the cost of an amateur.
That said, I will share what we are doing with our 4 year old (that is trapped in a 24 year old body). Every child, family, and needs will be different.
First we documented everything and have petitioned the court and the social security administration to recognize her condition and our guardianship.
Secondly, only because I am a retired military member, I got DoD to recognize her condition so she has medical care the rest of her life. She will also get 1/2 of my pension when I pass, so that will assist in her care after I am gone.
Third, we are saving like crazy now in Roth accounts (maxing out 401K, IRAs and such) and basically banking my retirement pay so that her siblings will only have to **MANAGE** her care, not **PROVIDE** it. I will be working for another 5-8 years, until I am confident the accounts have achieved irreversible momentum.
Fourth, we have established a SNT to care for her in perpetuity and to be the recipient of our estate after we pass so that my daughter has uninterrupted care. The Roth accounts will pass to that Trust without a tax burden. Our daughters will help manage that trust after we are gone.
Fifth, we have set up so that if my daughters **CHOOSE** to care for their sibling, then the SNT will support that decision and continue that care under their stewardship.
I’ll encourage you to keep working with your child, trying to help develop as many functionalities as possible.
My cousin’s daughter was born with “issues” which weren’t fully diagnosed until high school. Turns out the connections between hemispheres of her brain numbers in the hundreds instead of millions. The doctors were shocked when they figured that out because they couldn’t even figure out how she is walking, much less performing at school. Sure, she is clumsier than her siblings and she struggles in math, but the only accommodation her parents knew to give her when she was little was holding her back a grade. She is now in a special college for special-needs kids and she is studying to be a cook.
Because my cousin and her husband didn’t know what was wrong with their daughter they worked with her to overcome far more than the doctors expected. So, that’s why I would encourage you to continue to work hard with your child; far greater gains may be accomplished than anticipated.
Then, beyond that, they’ve set up a special-needs trust for her and they are talking strategies for how to ensure responsible financial decisions for her since she herself is unlikely to get to where she can do that on her own.
I know there are group homes available for people who need extra support when families can no longer provide it; friends of my parents-in-law are working to get one daughter and her adult children into appropriate homes before they pass away (current cancer and dementia diagnoses for the parents so it is urgent) so they can continue to live as normal of lives as possible but will also have the support structures offered by the homes.
Look into special needs trusts and ABLE accounts now. Wills, POAs, etc. If you can find an estate attorney that specializes in special needs, that’s helpful. Ours has a son with significant disabilities herself, so she understands the situation more fully.
Consider a Special Needs Financial Planner. The one I’m familiar with is called CPG, in Houston. Be aware that all of the advice about Social Security and safety nets only applies if those systems continue to exist.
If you have a 529 started, you can generally hang on to that, and then if needed, roll it into the ABLE, but that will depend on regs at the time. Trying so hard not to stray into a political discussion here. Pay attention to changes in laws and regs.
Your state may have waiting lists for services. Get on those now. In my state, the lists are approximately 17 years long. Not kidding.
Continue building all the skills you can with your kiddo, but also operate in their reality and keep those goals manageable and realistic. There’s nothing so demoralizing than an unattainable goal.
Continue building safe family relationships. You need redundancy if something were to happen to you.
At around 14, schools do transition planning to help set goals for after high school. You have to stay involved.
As 18 approaches, you will need to make some choices about legal protections. These can be everything from leaving things as-is, to a POA, to guided decision-making, to full guardianship. Highly dependent on the situation.
We had a weird situation with having no formal diagnosis for 16 years. Science hadn’t caught up. It’s a rare one. If there’s one thing I wish we’d done, it’s move to a state that is more friendly for disabilities. Ours blows, and our local area specifically blows, and now that guardianship is established, even moving out of this county would be incredibly complex. We’re stuck in many ways. I wish someone had told me, so I’m telling you.
—fellow forever parent, 17 years ahead of you on this road
Sign up for all Medicaid waivers NOW. There are years long wait lines for many. It also gets your child on the record as needing supports.
Some non-financial advice coming from a special education teacher…
You and your wife need to be vigilant about how this is impacting you and your relationship. Maybe a councilor or therapist.
Divorce rates for parents with a child with special needs are astronomical. It’s really, really hard to raise a child with special needs. Make sure you guys make it though together and be proactive
I have a special needs trust for my oldest disabled son for his share of my life insurance proceeds and retirement accounts if I die.
I contribute to his 529a.
One consideration of putting money in their names is being over asset limits for their SSI as an adult. 100k is allowed in a 529a before it exceeds asset limits. If you believe you will have the means to financially support them indefinitely then that may not be a consideration. I don’t have the means so I contribute to his 529a what I can and focus on my own IRA.