How to Plan (& Provide) for a Child with Special Needs

Nobody likes to attach a dollar amount to the joys of raising a child, but the fact remains that it can be quite expensive. This is especially true when it comes to raising a child with special needs. In fact, one study funded by Autism Speaks estimated the average lifetime cost to be $1.4 million for a person affected by autism. And that’s to say nothing of the other forms of special needs, which can include blindness, Down syndrome and ADHD.

With planning and preparation, you can help to ensure your child has the help they need, now and for the future. There are lots of organizations and services out there that can make the cost more manageable. In this guide, we’ll walk through some of the steps you can take to help you provide for your child. With this information — and the help of qualified professionals — you’ll have the tools necessary to make informed decisions for your child’s future.

Table of contents

Planning for a lifetime
Hit the ground running (Child’s Birth – Age 3)
On to public school (Age 3 – Age 18)
Spreading their wings (Age 18 – 22)
Life after school (Age 22+)
Passing the torch

Planning for a lifetime

A report released by the US Census Bureau found that 2.8 million American families had reported raising two or more children with a disability. According to the CDC, autism affects 1 in 88 children. And, based on the findings of the National Down Syndrome Society, 1 in 700 babies born in the US is diagnosed with Down Syndrome. These figures can seem daunting, but there are things you can do to ensure your child’s needs are met.

We’ve put together an in-depth look at ways parents can plan for their child’s lifetime. These tips are divided up into important milestones in your child’s life for easy reference. Remember, this information is not a substitute for consulting a financial professional; it’s a resource to further your understanding so you can make informed decisions.

Download the checklist

Hit the ground running

Child’s Birth – Age 3

You can never quite be ready for every eventuality when it comes to a child’s special needs. Every child is unique. However, there are things you can do after the birth of your child, and even before, that can make a huge difference down the road.

Ask about Early Intervention

The sooner you can ask your pediatrician about Early Intervention, the better. For those who don’t know, Early Intervention is a system of services for babies and toddlers with disabilities or developmental delays. Early Intervention services can entail teaching physical and cognitive skills such as crawling and problem-solving, along with communication and social skills like listening and playing.

These areas of focus and what they entail may vary based on your child’s level of need. Your local pediatrician might be able to point you in the direction of services available in your area. You can also explore online resources for more information. By getting a leg up on this research, you’ll be able to estimate the level of investment and budget this into your financial planning.

Estate planning and special needs trusts

Planning for your child’s welfare after you’re gone is important, but there are differing schools of thought on whether to draft a will with a special needs trust or not. The tricky thing about wills is that they can interfere with your child’s eligibility for Supplementary Security Income (SSI) and Medicaid coverage. If the will bequeaths a substantial sum of money to your child, it could disqualify your child from receiving any additional government aid.

In order to avoid this, many parents opt for special needs trusts, which appoint a trustee (a designated friend, family member, or lawyer) control over the estate left to the beneficiary (your child). Because the trustee has total control over the funds, your child can continue to be eligible for government aid if he or she needs it, without losing access to the trust. Whichever path you decide to take, make sure you consult with a financial professional for advice specific to your situation.

Look into life insurance

Taking out a life insurance policy can be a little tricky, but it’s worth it. After all, you want to make sure your child is provided for in the event of your passing. Take some of the stress out of choosing a policy by finding a reputable financial advisor — and asking about terms of payment upfront. You may not want to work with an advisor that receives commission on policies they sell, as they might be more motivated by the money than your concerns for your child’s future.

As to how much of a policy to take out, this will depend on what you need covered. For example, you might require a larger policy if you want your child’s caregiver wages covered along with your funeral expenses. Again, a financial advisor can help walk you through this.

Additional takeaways

• Don’t forget to include any other children you might have in your budgetary agenda.
• Start thinking about designating a legal guardian. You may not know the full extent of your child’s diagnosis or whether they will need a guardian at this state, but it never hurts to have a few candidates in mind.
• Refrain from opening any savings or investment accounts in your child’s name, as this could affect their eligibility for Medicaid and SSI later on.

On to public school

Age 3 – Age 18

By this time, you might be starting to understand your child’s diagnosis a little better. This understanding is invaluable, as it can help you advocate on your child’s behalf as they graduate from home-based Early Intervention into individualized education. As your child continues to grow, you will gain more insight into their special needs and be able to adjust your financial plans accordingly.

Build bridges with your community

Take the time to meet with your community leaders and establish a rapport with the local school faculty. You should definitely make it a point to speak with your local law enforcement and emergency services about your child’s special needs. Accidents happen, and if your child is unable to speak for themselves or articulate their feelings, a simple misunderstanding could turn disastrous. There are resources available online that go over what your child needs to know about the police and ways you can introduce yourself to them. Community organizers might also have insight into further financial aid you can look into for your child’s needs.

Get involved in your school community

There’s no reason you should have to go through this alone. In fact, you might find there are plenty of families in your area going through something similar. Speak with your school’s principal or reach out to community organizers in your neighborhood for information on parent support groups or educational workshops. This is a great way to develop bonds with other like-minded individuals as well as gain some important insight from parents of older children. In turn, this will assist you in determining the proper amount of financial aid your child will need.

Review finances regularly

About every 2 or 3 years, you should review your finances to determine if you are on track to achieve your goals. As your child grows, you’ll be able to develop an idea of what resources he or she may need. You may find that you no longer require such a large life insurance policy, or you may discover that more is required. Keep track of your spending, including any out-of-pocket expenses for your child’s care. Plan and project for the worst case scenario, since you never know what unexpected expenses may arise. Also, remember to budget for the rest of your family — and your retirement.

Determine eligibility for SSI and/or Medicaid

At about 14 or 15 years of age, it’s time to determine your child’s eligibility for SSI and/or Medicaid. As of 2005, your child’s available assets need to be less than $2,000 to qualify. If your child’s assets exceed this threshold, speak with a Certified Financial Planner (CFP). They will be able to assess your situation and guide you through the process of shrinking or allocating any excess assets that prohibit your child’s eligibility.

For more information on applying for SSI and Medicaid, consult the following:

• Supplemental Security Income
• Medicaid

Choose a legal guardian

In case something happens to you, it’s important to designate a legal guardian for children under the age of 18. However, depending on your child’s needs, he or she may need ongoing help and guidance as an adult. In the event that you feel your child cannot make important life and financial decisions on their own, a guardian will need to be appointed. Most states have their own preferences and legal requirements for what constitutes a legal guardian. In most cases, the preference will be for an adult parent to take on the role or, if this is not possible, an adult sibling or a close family friend. Guardians are supervised by the court to prevent any potential abuse of trust.

Additional takeaways

• Medicaid and SSI aren’t the only government programs that your child could be eligible for. Spend some time online looking into additional special needs support programs.
• Don’t forget that it’s okay to plan for your own retirement while you’re figuring out your child’s financial future.
• Think long and hard about who you would designate as a legal guardian. There are plenty of guides online that can help you make this decision as well as suggest alternatives to guardianship.

Spreading their wings

Age 18 – 22

Your child is no longer, legally, a child. Depending on their diagnosis, they may even be ready to enter the world of college. There’s a lot to consider, including whether your child will stay in school and if they will require additional support. This is also a great time to review items we have previously touched upon.

Appoint a guardian or an alternative

If your child needs help making important decisions, financial or otherwise, and you have not yet appointed a guardian, then now is the time. However, just as there is no one-size-fits-all solution to special needs funding, there are degrees of need when it comes to guardianship. In fact, you might not even need a guardian when a durable power of attorney may suffice. This is perfect for situations where your child can make decisions on certain matters but may benefit from occasional guidance.

Consider workshops and adult education

In some cases, college may not be an option, but that doesn’t mean your child has nothing to contribute or can’t make their own way. Speak with your local school administration to determine if there are any opportunities to attend employment or educational workshops. Organizations like The Douglas Center offer these and more, and there are many others like it that can give your child the opportunities to lead full and productive lives. The cost of tuition for enrollment in organizations such as these will vary. A lot of it will come down to your child’s level of need. Will they be staying overnight? If so, there’s room and board to consider. Financial aid opportunities are available to help defer these costs.

Doublecheck research on government aid

The previous section spoke to how you can determine your child’s eligibility for government aid (SSI and Medicaid). At this point, it’s a good idea to reevaluate that research to ensure your child is still eligible. Once your child turns 22, they will be out of the public school system, and that’s the time that these aid programs and services kick in.

Additional takeaways

• Make sure your child’s assets are not in excess of $2,000, as this will render them ineligible for SSI or Medicaid. In the event that this occurs, look into ways of shrinking those assets or transferring them to a trust.
• Get acquainted with any local organizations that work with the government to provide aid. Learn how these organizations work so you can strengthen your voice of advocacy for your child.
• In some cases, a child with special needs can live in their own space. Now is as good a time as any to start equity on a second home. If your child needs room to grow, then consult the real estate market and work closely with a real estate agent to find a living situation that addresses your child’s needs.
• In addition to any residential needs, you should also evaluate whether or not your child has any transportation requirements. If your child is eligible to drive, make sure you budget for that as well.

Life after school

Age 22+

By this point, your child is out of the public school environment and really coming into their own. There’s still time to look into additional support groups and services but, for now, your focus should be on reviewing your estate plans and balancing your child’s financial needs with your own.

Reevaluate your life insurance policy if necessary

By now, you know the extent of your child’s needs and should have a pretty good idea about the size of the policy. Still, it never hurts to dot every “I” and cross every “t,” so take some time to make sure your policy is just the right amount for your child and their needs. Do not be afraid to consult with a financial expert on these matters, as well.

Review estate plan and/or special needs trust

Make sure everything is in order as far as your will or special needs trust. It never hurts to double-check these things. Also, remember not to open any accounts in your child’s name or bequeath an inheritance in any manner that will put your child over the $2,000 asset cap, or you could affect their eligibility for support later on. Instead, consider a special needs trust. If you’ve already established one, re-evaluate the terms to ensure you’re happy with the arrangement of the appointed trustee and the manner in which funds are dispensed.

Take account of expenses and liabilities

Itemize all of the expenses you can think of that your child will have to handle or manage in your absence. By organizing this information, you can gain a better perspective on what your child will deal with financially and make any necessary adjustments to your financial trajectory.

Additional takeaways

• Continue to include any other siblings (even those without special needs) into your financial planning.
• Maintain a healthy balance between providing for your special needs child and your own eventual retirement. Don’t assume the government will handle all of your child’s expenses.
• Don’t forget about inflation when you are factoring in your child’s life costs and projecting the amount of money you’ll need to save up for retirement.

Passing the torch

It’s a sad fact of life that children often outlive their parents, but it can be scary for parents leaving behind a child with special needs. If you have been reviewing your estate plans and your finances, your child should have the tools necessary to carry on after you have passed away.

Continue reviewing of estate plans and finances

If you’ve been following this guide, you’ve been reviewing your financial assets, savings, and estate plans. Now is the time, if you haven’t already, to sit down with your attorney and review all of these necessary documents and policies to ensure your child has what they need after you’re gone. These documents should include policies on healthcare proxies, your child’s appointed guardian, the will, any trusts, etc.

Review ownership of assets and beneficiaries

Take stock of your assets and determine what you’ll leave in your child’s care that will most benefit their lifestyle. You’ll also want to review your life insurance policies, as well as any other services you’ve found that will help support your child long after you’ve passed away.

Additional takeaways

• Consider utilizing a special needs trust as a means of dispensing a sizable inheritance. By doing this, you ensure your child receives all that they are owed without the government withdrawing their aid.
• While ensuring your child has what they need, you may have to push your retirement date back a few years. Be flexible, and don’t be afraid to seek the help of a financial planner if you have questions.

Providing a healthy life

It can be difficult to determine what your child will need when they are first born. Instead, it’s recommended that you spend the first couple of years living in the moment and understanding your child’s special needs before making any huge decisions. Once your child starts getting into public school and graduates from Early Intervention, you’ll have a clearer understanding of their diagnosis and what you’ll need to do to ensure their financial future. Beyond that point, you’ll need to reevaluate your financial goals and plans accordingly.

Keep a careful record of your spending and your income and consult with financial professionals on matters regarding your estate and life insurance policies. And remember that this guide is not a substitute for a professional consultation. Use this guide to familiarize yourself with the financial hurdles of raising a child with special needs so you can discuss your child’s future with reasonable expectations.

Additional checklist

We have also put together an additional checklist that condenses this guide into a series of the more pressing items and matters to consider. You can download the checklist by clicking below.

Download the checklist

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