Financial plans for special-needs children

Family on lawn
  • Specialized planning can be critical for special-needs children.
  • Parents will need a financial adviser who has expertise in disabilities.
  • Support groups on disabilities can be another source of advice.

For families with special-needs children who have disabilities, everyday life can be complex and starkly different than it is for other families. In addition, many of these parents carry another worry, says Tom Nurse, a Tampa, Fla., financial adviser for families with special needs.

"What people don't talk about is death, money and what's going to happen to Johnny. They worry about it, but they don't want to talk about it," he says.

He says specialized planning can be critical to provide peace of mind for parents and a secure future for their special-needs children.

Keep good records

Where do you begin this involved task? Whether you are parents of a child born with a disability or of one who became disabled later in life, you must begin to save records, says Deborah Leuchovius, a program director at the Parent Advocacy Coalition for Educational Rights, or PACER, in Minneapolis.

Her organization has created an online step-by-step guide to financial planning for parents faced with determining their child's financial future and whether they can afford the care their child will need.

"The most basic advice is to keep records, even if it's just to put them in a box initially. Know that you're going to need them and need to organize them," says Leuchovius, whose son has spina bifida, a birth defect that occurs when the fetal spinal column doesn't close completely during the first month of pregnancy.

Eventually, Nurse says parents will need a financial adviser who has expertise in disabilities.

You can get leads on potential advisers at federally funded parent resource centers for families with special-needs children. There is at least one in every state. Not every site has financial expertise, but they all provide referrals and guidance, Leuchovius says. You can find the center nearest to you at the Parent Center Network website.

Support groups on disabilities can be another source of advice and referrals, says Brent Neiser, senior director of strategic programs and alliances at the National Endowment for Financial Education in Denver.

Families looking for an incentive to financially plan for special-needs children should consider that the financial strain can be so overwhelming that it may lead to divorce. In that scenario, it's important for couples to work together on a plan for a financially stable future for their children. The Financial Planning Association of Miami-Dade recently created a guide for couples who have special-needs children and find themselves separating, which can be found on the organization's website.

The cost of caregiving

Ultimately, a plan that works for one family may not work for another, even if the children have similar needs.

"Disabilities run the gamut," Leuchovius says. "We don't want to assume a life on Social Security."

Indeed, Neiser says as more education options for people with disabilities are emerging beyond high school, and medical and technological advances rapidly change their lives and life expectancies, this planning is even more critical.

"This raises the question of the child outliving the parents," he says. One issue involves caregiving. Who can take over should the parents precede their child/children in death or if the parents become disabled?

"There's obviously a lot of financial consideration there," Neiser says.

In 2009, about 42.1 million family caregivers in the U.S. provided assistance to an adult with limitations in daily activities at any given point in time, an AARP study shows. The estimated value of this unpaid work was $450 billion in 2009, up from $375 billion in 2007.