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Love that lasts: Estate planning tips for your child with special needs

Your child with special needs is truly special to you and your family — and you want your love, care and support to outlast you.

To make sure that happens, there are practical steps you can take.

Prepping for a secure financial future

According to the U.S. Census Bureau, more than 40 million Americans were living with a disability in 2016.1 And adults with disabilities are living longer than ever before.

However, many parents of children with an intellectual or developmental disability aren’t doing enough to prepare for a future without them. In a study conducted by the University of Illinois, 32 percent of parents had done a moderate amount of preparation, while 12 percent had done nothing.2

It’s not because they don’t want to. It could be they lack sufficient information (39 percent), or simply don’t have enough time in the day.2

In the meantime, here’s how you can put your child on a path that leads to a secure future — with or without you in it.

5 action steps you can take now

As a parent, you can plan for your child’s future by taking action with these five steps:

  • Step 1: Choose your team of dedicated family members and professionals. Your attorney, social worker, and financial professional should understand fiduciary requirements, government benefits, tax laws – and any special concerns your family may have.
  • Step 2: Assess your needs. Set short- and long-term goals. Determine the amount of money you need and how much your loved one will need.
  • Step 3: Prepare and implement your strategy. Think about the lifestyle you want for your loved one, what it will cost, and the resources you will need to make it happen.
  • Step 4: Write down your vision. Write a Letter of Intent for future caregivers and trustees to direct them about your wishes.
  • Step 5: Go over these steps annually to review any health or benefit eligibility changes, a changed financial situation, the current financial team, a special needs trust, and any changes needed to meet your goals.

Set up a personalized estate plan

Your child might qualify for government programs such as Medicaid or Supplemental Security Income (SSI), which can total up to $750 a month (in 2018)3 and is meant to pay for food and shelter.

However, there are strict income and asset limitations. For example, your child must have less than $2,000 in assets to qualify for SSI.1

It’s important you properly prepare a financial strategy so government benefits aren’t reduced — or stopped — when they’re supplemented with personal funds or a life insurance policy.1 You’ll want to talk to a financial professional to learn more.

Life insurance benefits

Speaking of life insurance, it can provide smart solutions for families with a special needs child.

For example, the death benefit provides tax-free financial support, which can help your family to maintain your current lifestyle. A policy’s cash value can help with current and future costs of raising your child with special needs, and can grow tax-deferred.

Additional agreements are available to help enhance your policy and address your goals, such as providing for your own care. (You don’t want to forget about your financial needs as you grow older.)

Consider a special needs trust

If an excess amount of countable resources disqualifies your child from receiving SSI benefits, consider establishing a first party special needs trust (SNT). Third parties can also set up other types of trusts to hold or distribute gifts or inheritance.3

Be sure to consult a financial professional

To identify and meet your financial needs and goals, consider working with an estate planning attorney and financial professional who can discuss with you these estate-planning tools:

  • Power of attorney (POA) is the person who has the legal right to handle your financial affairs if you’re unable to do so.
  • Living will is a legal document that provides direction regarding your health care in case you become incapacitated or terminally ill.
  • Trust is a legal document that directs the management and distribution of assets.
  • Letter of Intent is an informal document that gives detailed instructions to future caregivers and trustees after you die. These instructions should provide an overview of your child’s benefits as well as identify the people who you wish (or don’t wish) to play a role in your child’s life.1
  • Special needs (supplemental needs, first-party or third-party) trusts protect your child’s assets while allowing her or him to maintain eligibility for public assistance benefits. Note: When the beneficiary dies, money left over in a first-party trust first goes to repay states for benefits paid. On the other hand, third-party trusts give remaining money to family members.1
  • ABLE Accounts are tax-advantaged savings accounts that let you save up to $100,000 without losing government benefits.4

Potential education and job resources

Every parent dreams that their child — with or without special needs — can reach his or her full potential. This includes education and finding a fulfilling job or career.

The Section 529 College Savings Plan lets families set aside money for a wide range of education expenses. The money grows tax-free. To be sure your child’s SSI benefits aren’t negatively affected, only use funds in a 529 plan for qualifying expenses, such as tuition fees, school supplies and transportation.5

The Social Security Administration’s (SSA) Ticket to Work program enables SSI recipients to explore free employment services. In addition, Plan to Achieve Self-Support (PASS) allows SSI recipients to set aside funds to cover expenses related to their job search.3

Don’t forget — enjoy the here and now 

Finding time to start putting financial plans in place can help ease your worries about the future for your child with special needs. And help you enjoy life’s everyday moments with your family now.

Remember, there are steps you can take — and you don’t have do it alone. There are resources you can turn to, including a financial professional, who can make recommendations ensuring the happiness and welfare of your child down the road.

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Have additional questions?

A financial professional can help answer any additional questions about your personal situation and help your family prepare. 

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“Special needs” defined

Kids with special needs need help caring for their day-to-day duties. Their needs can include physical, mental, and emotional disabilities.

Care like medical, physical, occupational or speech therapies, special educational support, and financial assistance can help maintain their independence.

The ABLE Act is a tax-advantaged savings account designed for individuals to help pay for qualified disability expenses. Participation in a ABLE Account does not guarantee that the contributions and investment returns will be adequate to cover all expenses related to the designated beneficiary as a result of living with disabilities. Contributors to the plan assume all investment risk, including the potential for loss of principal, and any penalties for non-qualified disability withdrawals. 

Each state's ABLE program will have different investment choices, costs and fee structures. You should consult with your financial, tax or other advisor to learn more about how state based benefits (including any limitations) would apply to your specific circumstances. You may also wish to contact the state specific plan Program Administrator to learn more about the benefits that might be available to you by investing in the an ABEL Account. Not all states have an ABLE program.

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions, such as surrender periods. 

Insurance policy guarantees are subject to the financial strength and claims-paying ability of the issuing insurance company. 

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit.​

Policy loans and withdrawals may create an adverse tax result in the event of lapse or policy surrender, and will reduce both the surrender value and death benefit. Withdrawals may be subject to taxation within the first fifteen years of the contract. You should consult your tax advisor when considering taking a policy loan or withdrawal.   

Financial professionals do not provide specific tax/legal advice and this information should not be considered as such. You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

This information is a general discussion of the relevant federal tax laws provided to promote ideas that may benefit a taxpayer. It is not intended for, nor can it be used by any taxpayer for the purpose of voiding federal tax penalties. Taxpayers should seek the advice of their own advisors regarding any tax and legal issues specific to their situation. 


1. Holmes, Tamara E. “Preparing for a Life After Death: A Guide for Parents of Adult Children with Special Needs,”, January 22, 2018.

2. Perkes, Courtney. “Few Parents Plan For Future Of Children With Disabilities, Study Finds,”, February 22, 2018.

3. Suzuki, Scott C. “Does Your Child Qualify for Supplemental Security Income? Dispelling Misconceptions,”, March/April 2018.

4. Achieving A Better Life Experience (ABLE): National Resource Center,, 2018.

5. Jones, Andy. “Are 529 Plans the Best Way to Save for SSI Beneficiaries’ Education Expenses?”, October 1, 2018.

DOFU 3-2019