Financial planning for a child with special needs can be overwhelming. The journey of diagnosis is as painful and emotionally draining as it gets. It involves a lot of sleepless nights. An air of perpetual anxiety surrounds you all the time. Your head is full of a million questions: what will become of my child’s education and career? Will they always depend on me? What happens after I pass away? In times like these, you have to try to keep your head clear. It’s easier said than done, but it is crucial to start planning for their finances as soon as the diagnosis is complete.
Here are 11 ways you can make your child’s future secure.
- Life and health insurance
A considerable amount of your savings will be going into treatments and therapies of all kinds: cognitive, behavioral, speech therapies depending upon your child’s diagnosis. A wise step will be to buy greater life insurance by estimating your child’s future cost of living, caregiving, and medical expenses.
- Estate planning
Estate planning is an extremely important part of planning for your child’s future. It takes care of your child’s medical and financial needs if something happens to you. You can draft a will or make a trust or even both. However, for this, you need to know the difference between trust vs will. There are numerous organizations and law firms that will help you in this part of the process.
- Create a trust
You can begin your estate planning by starting a trust and placing all assets, property, and investments in it. No matter how small you start, do it. There are many different kinds of trusts; you can start with a special needs trust. This is where you will put savings and gifts given to your child.
- Write a will and appoint a guardian
By drafting a will, you ensure that your child’s emotional, financial, and physical needs are taken care of after your death. It enlists where your assets will go after your death while appointing a guardian for a child. The guardian can be a close friend, relative, or even family—anyone who is empathetic, compassionate, and patient enough to know what will be expected of them. However, you need to let the guardian know that their responsibilities might continue even after your child’s legal age to inherit.
Estate planning should not be something you do alone. You can hire an adviser or consult an independent organization. After you tell them your situation, they will make the best suitable plan catering to your needs.
- Career options
If you think that your child has no career options, you might be wrong. With increased awareness amongst people, more NGOs are now offering vocational training to children with special needs.
- Name a trustee
A trustee is someone who will look after the special needs trust after your death. It can be someone from your family or friend circle. They have the job of ensuring that the trust is being used only on your child’s needs. The guardian has to take approval from the trustee before withdrawing money. Hence, it is advised to have a different person for a trustee and another for the guardian.
- Contingency fund
Even if you have medical insurance, it is essential to have enough money in your savings account that acts as your contingency fund. This is because there might be spikes in medical needs for your child, so it is vital to take them into account.
- Tax credit
If your child is availing of social security benefits, they can qualify for certain tax benefits, which reduces the amount of taxes owed on taxable income. Once they start earning, they can be eligible for earned income tax credit. You can visit the IRC website to see if they qualify for it.
- Define financial goals and invest accordingly
Once you are aware of your short-term and long-term goals, you need to plan for them separately. Don’t put all your money in safe deposits and traditional insurance plans. It is important to invest some of it in your equity so that it grows over time. Adding on, keep your house renovated to cater to your child’s specific medical needs. You can also have CCTV cameras installed.
- Invest in skills
Your child’s disabilities should not act as an obstacle in their path to a successful career. Choose a field that you think will be suitable for your child, and then teach the skills needed for them to do well in that field. This will make sure that they are not always dependent on you. Eventually, they will learn to make their own decisions and become self-sufficient.
- Hire an advisor
The process of planning your finances is emotionally draining and confusing. You can always reach out for help and hire an advisor who you can consult anytime.
Managing your finances is easier said than done, especially when you have a differently-abled child. It can be a stressful process. Fortunately, these 11 steps will make the process as smooth as possible for you, and you won’t have to worry too much about your child’s future guardianship or expenses.
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