When caring for someone with special needs, you want to feel like you're providing the very best care for your loved one. Providing this support can be an enormous responsibility — one that could leave you with concerns about the future. And when it comes to special needs planning, establishing a strong financial foundation is likely your top priority.
If your loved one is likely to outlive you, it could be even more crucial to take steps now to make sure they'll be OK when you're gone. Fortunately, there are ways to financially protect people with special needs.
Planning for Tomorrow
When caring for a loved one with special needs, you must often make many major choices, from choosing the type of care he or she receives to putting together a plan for the future. It can be difficult to know if you're doing everything you possibly can to support your loved one, but exploring the available options could help put you on the right track.
Special Needs Trusts
Many people with special needs or disabilities rely on Supplemental Security Income (SSI) and Medicaid. However, people with more than $2,000 in assets can lose their eligibility in these programs. This could create a dilemma for many people, as caregivers often want to provide a financial cushion but do not want their special needs relative to lose government benefits.
A special needs trust could help solve this problem, as a trust does not affect eligibility for these government benefits.
If your loved one will need care in an assisted living facility or a nursing home, a trust could provide the money to cover these expenses. A trust could also help fill in the financial gaps between SSI and Medicaid and provide funds to pay for a variety of things like education, travel, medical expenses and more.
When you create a trust, choosing the trustee (to facilitate the trust) could be one of the most important decisions you make. And whether you choose a close family member or a trusted friend to be your trustee, having an open conversation with him or her about the responsibility could help put your mind at ease. This conversation could also help the trustee understand your desires — and better prepare for tomorrow.
For many people, a life insurance policy is one way to provide future financial security for their loved ones. Many choose to purchase a policy when they get married or have children — and it is also a popular option for special needs planning.
You could purchase a life insurance policy and designate the established special needs trust as the beneficiary. You could also choose to leave the death benefit directly to the person with special needs (but keep in mind that this option may have tax implications and could affect their eligibility for government assistance). Consider speaking with a financial representative who could help you discover the right plan of action for the future and learn more about how a life insurance payout could help your loved one.
You want to provide the very best for your loved one while you're still around, but that doesn't mean you can't start preparing for the future. It could help to rely on a team of health care providers, teachers, therapists and spiritual support, as well as legal and financial professionals who understand families caring for a person with special needs.
A plan for tomorrow could be one of the most important gifts you leave your special needs relative — so consider getting started.