Financial Planning for Adult Children with Special Needs ~ YOUR MONEY WITH ALEX TALCOTT

By: Alex Talcott -Oct. 2017

Alex Talcott, Vaura ConsultingIf you’re a parent of a child with special needs, you’ve likely dedicated much of your life to researching, providing, and advocating for the best care for your child. So naturally, you may worry about what will happen when you are no longer able to supervise your child’s care due to declining health, illness, or death. Fortunately, there are steps you can take to better ensure your child has sufficient financial resources along with a dedicated support system. Here are six areas to help protect your child’s future.

1. Include your child in the process. To the extent you’re able to, talk with your child about his or her future. If employed, is her job sustainable for the future? Does he feel comfortable managing everyday finances? Where does he naturally turn to for support? Understanding your child’s wishes and being realistic about his or her abilities will help you craft a long-term support strategy.

2. Provide guardianship and decision-making support. If your child needs support making financial, legal or medical decisions, it’s important to obtain guardianship and/or conservatorship from the courts. With this authority granted, you can designate who should have this responsibility when and if you are no longer able to fulfill the role. Communicate early and often with the family members or delegate who will oversee and provide support for your child’s care, so that they know what to expect. It’s important for your delegate to know what decisions your child can make independently, and where he or she may need some assistance.

3. Create an estate plan. Establishing an estate plan is key to ensuring your wishes are followed and may help your heirs avoid probate court. Ask your financial advisor and estate planner to help you include protections for your child within your estate plan. Provide care instructions in the event of your death or if an accident leaves you unable to manage your child’s care.

4. Save strategically. A tax-advantaged ABLE account, created by the Achieving a Better Life Experience Act in 2014, is one way to create a financial cushion. Earnings grow tax deferred, and funds can be withdrawn tax-free if they’re used to meet qualified expenses for your child. The law defines “qualified expenses” broadly, allowing funds to cover the costs of health care, assistive technology, housing, education, legal fees or personal support services. Anyone can contribute to the account, so that means grandparents, siblings, even family friends can help grow this nest egg. Your financial advisor can help you determine if your child meets eligibility requirements and review annual contribution limits to help you maximize this resource.

5. Set up your inheritance. If you’d like to leave money to provide for your child, consider if establishing a special needs trust makes sense for your situation. Simply naming your child as a beneficiary in your estate could compromise his or her eligibility for government benefits such as Supplemental Security Income (SSI) and Medicaid. There are several types of trust accounts that allow your child to maintain government support, often by providing funds directly to a care service or through a trustee. There are advantages and considerations for each option, so consult your attorney for guidance.

6. Research living arrangements. If your child is still living at home, explore housing options that will provide a safe environment tailored to his or her abilities. Researching your options is crucial, even if you intend for your child to reside with a sibling or another family member. Circumstances such as divorce, job loss or illness could prevent the family member from providing the level of care your child needs and deserves.
By addressing the areas above, you can feel more confident that your adult child will be well cared for.

Alex Talcott, JD, is a Financial Advisor with Ameriprise Financial Services, Inc. in Middleton, Massachusetts and Portsmouth and Bedford, New Hampshire. He specializes in fee-based financial planning and asset management strategies and has been in practice for over 10 years. To contact him: (603) 319-3108; 25 Chestnut St., Ste. 300N, Portsmouth, NH, 03801;

The illustrations above are hypothetical and are not meant to represent any specific investment or imply any guaranteed rate of return.
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