With as many as 2.6 million special needs children in our country, there should be just as many special needs plans in place. Though these children will certainly need a lifetime of special needs care, after their parents have passed away, few families are actually prepared to provide a lifetime of special needs care. Unfortunately, according to some reports, only about 62% of parents have a sufficient plan in place to care for their special needs children after they are no longer capable of doing so. For those select few that have a plan, often it disqualifies the children for government benefits.
Isn’t life insurance coverage sufficient?
The most common method of providing for the anticipated costs of a lifetime of special needs care is life insurance. In fact, nearly 85% of parents with a special needs child under the age five, have a life insurance policy in place. However, parents of children ages 13-18, are less likely to have a policy, even though the cost of care tends to increase with age. The majority of parents are unaware of the fact that they can access the accumulated cash value in certain policies, in order to cover some of the cost of their child’s special needs. Of those that do have this knowledge, nearly 72% of parents do not actually take advantage of this benefit.
Common mistakes in special needs planning
Having a plan may not be as beneficial, if it has mistakes. Nearly half of parents with special needs children leave the funds directly to their children, or name their children as the beneficiary. Both of these methods have the serious potential to disqualify their children for necessary government benefits. Also, only a fourth of parents with special needs children take the necessary step of creating a special needs trust, which would provide for any supplemental needs and expenses, while not jeopardizing government benefits.
What you can do to provide a lifetime of special needs care
There are four easy steps every parent can take to ensure that the needs of their special needs child will be protected. First, discuss with your estate planning attorney how to develop a financial plan that will be sufficient to fund a lifetime of support for your special needs child. Second, create a special needs trust that will provide protection for your assets, while ensuring that your child will remain eligible for government benefits and services.
Third, select your chosen guardian for your special needs child, and discuss with him or her the commitment and obligation that is expected from them. Be sure that the guardian is capable and willing to serve in that important capacity. Finally, purchase a permanent life insurance policy that can cover the anticipated costs of your special needs child’s care.
If you have questions regarding special needs planning, please contact Sexton, Bailey Attorneys, PA online or by calling us at (479) 443-0062.