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Building a Financial Plan for a Child with Special Needs

By: Alex Magid, Esquire, Vice President and Trust Officer, Univest Bank and Trust Co.

For parents of children with special needs, creating a sound, long-term financial plan is not only critical, but often complex. The basic idea behind planning for a child with special needs is to design a way to provide for your child after your death while ensuring that child remains eligible for state and federal benefits. The actual planning can be intricate and ever-changing legislation and rules can muddy the waters. Therefore, working with an “A-team” of specialized professionals can help ensure you’ve properly planned for your child’s life well beyond yours. 

Creating this financial plan can be compared to the process of building a house. There’s a series of steps involved and it’s important to assign the right professionals to designated tasks. Here are the steps you need to take: 

Find an architect for your plan. Before your “house” can be built, you need to meet with an architect who can design the blueprints of the project. In this case, an attorney will be your architect. Your attorney will create the foundation of your estate plan which needs to include special needs planning – this is the most important step to setting up your child’s future. Look for an estate planning attorney who has extensive experience in special needs planning, as they need to be familiar with state and federal benefits laws. Your attorney will help you obtain and implement the proper legal documents and structures such as a will and a special needs trust. Once these elements are in place, you can begin building the investments that will fund your child’s trust.

 

Pass the plans off to your builder. After the design is drawn, you can put your builder to work. Your financial advisor will act as the builder. He or she will review the structures that have been laid out by your attorney and assess the best way to financially cover the future needs of your child based on the unique financial situation of your family. In addition, your financial advisor can help ensure that beneficiary designations are properly changed to the trust.

It’s important that any assets given or left to your child go to their trust rather than directly to the child as this is the first step to ensuring they will retain government benefits. Family members who might name your child as a beneficiary should do so through the special needs trust which your advisor can help facilitate.
 
Make necessary adjustments over time. Now that your house is built, the focus should shift to long-term maintenance. With a well-devised and well-built plan, there’s no need to maintain day in and day out. However, you will need to check in on your plans and make necessary adjustments at major life events such as the birth of another child, divorce, or death of a family member. Possible savings methods can also change; for example, 529 ABLE accounts came into existence in 2014 and are available to individuals diagnosed with significant disabilities before age 26. Annually reviewing your overall plan to determine how new legislation or strategies might impact its objectives will help you ensure that your child’s future is on track for success.

 

What happens if you don’t plan correctly?

Failing to plan for your child’s future can have a drastic impact on their security down the road. Many individuals and couples think they can handle “building this house” on their own, but it’s much more beneficial to lean on specialized professionals.

Taking the time to create an estate plan with a qualified attorney, build out a solid financial plan with your advisor, and make any necessary adjustments over time can all help secure your child’s financial future. If you’re ready to begin planning for your family’s future or have any questions about special needs financial planning, the Trust Services team at Univest Bank and Trust Co. and the financial advisors at Girard, a Univest Wealth Division, are available to help. To have a conversations, contact us at 877-723-5571.

 

Trust services are offered through Univest Bank and Trust Co. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.

These articles and reports are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. The information in these articles or reports, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.