When you have any child—with or without special needs—certain documentation is in order. You need a will, because it’s the only legal document that allows you to name guardians. You need a durable power of attorney for finances which allows someone else to make financial decisions (as well as pay bills) on your behalf should you be unable. (And, though they’re not directly related to protecting your kids, while you’re at it you should get a living will, which tells a doctor or hospital whether you want life support, and healthcare proxy, which allows another person to make medical decisions if you’re incapacitated.)
Of all the emergencies on the list, this is one for which you can’t do a lot of preparation. Special needs take most parents by surprise. “Some parents know from birth,” says Cleveland-based estate planning attorney Laurie Steiner, who specializes in working with parents who have children with special needs (and who has a special needs child herself). “But sometimes I have families whose child is bi-polar and ADHD and who didn’t exhibit until age 4—and then it was all of a sudden. Whenever it is that you discover something is going to be different about your child—and that’s not a bad thing necessarily—is when you start to take the appropriate steps.”
That means first that you have the right guardian in your will; in some cases the guardian you originally selected will no longer be appropriate. And, if your child will not be able to be self-supporting financially, that there are resources in place should something happen to you.
You’ll need to see two professionals to make this happen, an attorney and a financial planner. There are two federal sources of support for children with special needs: Supplemental Security Income or SSI and Medicaid for healthcare. Both of these programs are needs-based. But once your child reaches 18, you should apply for benefits. (“I’ve had clients miss out on years of benefits simply because they didn’t do this,” says Steiner.) Qualifying for Medicare and SSI at this point is based on the assets and income of the child. Many parents figure they’ll leave the money to a sibling and the sibling will take care of the special needs child, but that’s not wise. “Even if there are good intentions, what if the sibling gets sued?” says Steiner. The solution is called a “special needs” or “supplemental needs” trust. This is a pool of money set up for the benefit of your child that is not owned by the child. You name a trustee (and generally a successor) who will dole out the money for the child’s benefit.
You’ll want to see the planner to determine how much money to put away for your child. But if you aren’t able to amass enough in savings during your lifetime consider funding the trust with life insurance. The trust can both purchase and own the insurance policy (or if you already own it, you can transfer ownership to the trust—but do so understanding you have to live an additional three years for the transfer to be considered effective).