Other Finances
As the parent of a child with a special need, you will be assisting him in planning to ensure that his financial future is stable. If your child has proven that he is able to complete a formal postsecondary education program and pay his bills through gainful employment, you may consider leaving him an inheritance through a will. If he is unable to handle finances, you may wish to consider a special-needs trust.
Trusts and Wills
Consider ways that your financial resources can meet the needs of your child throughout his adult life. If you choose to leave money to your child through a will, there may be some drawbacks.
Even a very small amount of money in assets can disqualify an individual from receiving government funding.
Money inherited through a will must be managed. Who will assist your adult child in managing his money?
Money inherited from a will is a set amount. When that money is exhausted it is gone. Who will provide financial support for your adult child when the finances from the will have been depleted?
Leaving funds to your adult child through a will that lacks special provisions basically says: “Here is the money. It is your job to make it work.” Many adult children with disabilities are unable to handle basic monthly financial obligations much less the responsibility of large-sum money management over a lifetime.
Special-Needs Trusts
A special-needs trust (sometimes called a “supplemental needs trust”) also requires a legal document. It outlines specifically how money is to be used. It designates an individual as a trustee to oversee the use of the money and to manage how the funds will be invested.
Write the special-needs trust carefully so that it does not take away from any government funding your child may receive. Unless you are very, very wealthy, your adult child will need both kinds of “income” to maintain his living expenses and some basic “wants.”
Fact
Shop around for financial services to establish your child's special-needs trust. Some offices will charge a fee as well as taking additional commissions. Others, such as the National Association of Personal Advisors, will only charge a fee.
Parents can calculate the estimated costs of living for their child at the Merrill Lynch website. After entering basic information (age, disability, known financial needs for medications and equipment), the calculator can give parents an idea of what they should consider as their child's financial needs for the future. The Merrill Lynch site also has information on financial planning for children with specific special needs, including hearing loss, vision impairment, and autism.
