Wednesday, November 30, 2011

Financial Planning for Kids With Special Needs

By Renee Hanson, Ameriprise Financial

Are you wondering how to plan for the future of a child with special needs? Here’s a list to help you get started:

Set up a special needs trust.

The most critical component of a plan for your child’s future welfare is the special needs or supplemental trust. Through Social Security and Medicaid, the government subsidizes certain services to help care for special needs individuals with demonstrated financial need, but there are strict eligibility requirements.

A special needs trust allows you to circumvent income limitations imposed by the government, because money or property left in this kind of trust does not count toward the allowable limits. Why? Because you are not leaving your assets in your child’s control. Rather, the assets are assigned to a trust that is managed by a trustee, who in turn nominates your child as beneficiary while maintaining absolute discretion regarding expenditures from the trust. The trustee can use the assets to pay for necessary services not funded by other sources. Assets can also be used to fund activities that enhance quality of life, for example, to pay for a haircut, a night at the movies or even a vacation.

Name a trustee to handle your child’s finances.

The trustee you assign to a special needs trust should be a person who is not only trustworthy but also competent to manage finances and follow complex and ever-changing government guidelines. It’s a big responsibility, which is why some parents turn to a financial or nonprofit institution that specializes in trusts to serve as the child’s trustee.

Seek legal guardianship of your adult child.

If your child is unable to handle his or her own medical or financial decisions, apply to become the child’s legal guardian before he or she turns 18. Because the process varies by state, consult your legal professional for more information. You’ll also want to identify a legal guardian for your child in the event of your death. Make sure it is someone you are confident will carry out your wishes and advocate for your child’s best interests.

Write a letter of intent.

This document serves as a guideline for the caretaker(s) of your child when you are no long here. Update it annually to help ensure that it includes:

  • Current information about your child’s likes and dislikes
  • Contact information for your child’s medical, dental, educational and other professional providers
  • Other pertinent information to help your child’s caretaker(s) meet your child’s needs

Do you want more helpful advice on managing your finances, budgeting, investing and saving? Become a member of the Fresh Start Community of women today: Membership gives you exclusive access to all of the exciting & interactive workshops.

Meet with your legal, financial and tax professionals as a team.

This will enable you to put together the right combination of legal and financial solutions to ensure your child is financially secure and receives quality care throughout his or her lifetime.

Renée A. Hanson, CFP®, CEP®, CDFA™, CFS, is a private wealth advisor with Hanson, Ayala & Associates, a private wealth advisory practice of Ameriprise Financial Services, Inc. Her passion is in helping women achieve their dreams and financial goals, regardless of life’s many obstacles. Renée is licensed/registered to do business with U.S. residents only in the states of AZ, CA, CO, GA, IA, IL, MI, MN, MT, NH, NJ, NM, NY, OH, PA, SC, TX, VA, WA, WI. Please visit: to learn more.

Ameriprise Financial does not provide tax or legal advice. Consult your tax advisor or attorney.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients.

© 2011 Ameriprise Financial, Inc. All rights reserved.

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