It seems like the topic of special needs planning drops into my lap every 3-4 months. In the course of a conversation with a new client I'll learn that there is a special needs child in the picture. Like a snowflake, all situations are different, but in many cases they can be handled nearly the same.
Let's look at an example. A middle-aged couple has 3 kids, one of which is autistic. While it's assumed that one of the other two kids will take responsibility for their sibling down the road, nothing is written in stone. Mom and Dad can care for the child up to a point but someone is going to have to care for them as they get older. And what happens when Mom and Dad pass away?
Most importantly, special needs kids grow to become special needs adults.
A Special Needs Trust is typically the answer. First and foremost, I highly recommend you find an attorney who has a couple of these irrevocable trusts already approved by a judge. As an attorney friend of mine said when discussing this topic with me, "Do not let an lawyer 'practice' on your client!"
A Special Needs Trust works like this: The trust is established but without any money inside. The money comes from a second-to-die life insurance* policy on the parents. The logic behind this is that if one parent dies, the surviving parent can still care for the child. At the death of the second parent, the life insurance policy is paid to the trust which then can help support the special needs child/adult.
The key to all of this is planning. As I stated earlier, all cases are different, however taking the time to prepare can really lessen the stress and financial burden down the road.
*We suggest a second-to-die guaranteed universal life policy. For more information, contact us through our website at Surf Financial Brokers.
Chris Castanes is the president of Surf Financial Brokers, as well as a professional speaker helping sales people be more productive and efficient.