Retirement planning takes on extra weight and complications when preparing for disabled children’s needs

Tricia Rosen, a principal with Access Financial Planning in Andover, Mass., is a financial planner, but she’s also a mom of three kids, including a 20-year-old son with an intellectual disability.

Her son has the life expectancy of an average man in the U.S., which means she and her husband not only have to plan for their retirement, but they have to save for the support of their son throughout his lifetime.

“We know he’s not going to be able to support himself. So we’ll be supporting him after we’re gone,” Rosen said. “Before he could walk, I started worrying. It was clear right away that we needed to make big decisions and I immediately started worrying.”

Rosen said her family was warned not to rely too heavily on their other children to support and care for their brother once she and her husband have died in an effort to protect the sibling bond and relationship.

“My best advice is to hire an estate planner who specializes in special needs. It’s really easy to make a small mistake and you’ll be gone and not be able to fix the problem,” Rosen said.

Issues such as securing low-income housing, as well as qualitative issues such as her son’s social life, peers, self-esteem and overall happiness is what keeps her awake at night, Rosen said.

Financial planning with more than one child is a juggling act and parents want to be fair to all their children while protecting the care and finances surrounding the child with disabilities, Rosen said.

“We thought about it a lot. We have a whole life insurance policy where the beneficiary is the trust that will support our son. We also have legacy financial funding that will go to the other two with the caveat that they have to look out for their brother,” Rosen said. “You do all this planning and worrying and just pray it doesn’t blow up.”

The key issues you need to tackle include:

1. Apply for a Medicaid waiver as soon as you have a diagnosis, said Eric Jorgensen, founder of Special Needs Navigator and the parent of a child with disabilities. The waiver allows the child to receive services such as equipment, home care aides, meal delivery, counseling services or other services that might not have been covered under the traditional Medicaid rules.

“A big mistake is not availing yourself of the state and federal government money to help you with caregivers and resources. It’s all very complicated but there are experts and tools to help you navigate this,” said Mitch Tuchman, managing director and chief investment officer of investment firm Rebalance, and a MarketWatch contributor. Tuchman also has a son with disabilities.

2. Hire an attorney who specializes in families. Rules vary by state, so find a local attorney who can help you navigate services and laws in your state.

3. Create a special needs, or supplemental needs, trust. It is a way to save money for your child that is secure and won’t impact your child’s ability to qualify for federal benefits such as Medicaid or Supplemental Security Income.

“The beauty of a special-needs trust is that it cannot supplant what the government provides. It is for discretionary spending or care that is not covered by the government,” said Heidi Isenhart, a partner with Shuffield Lowman in Orlando, Fla.

4. Explore opening an ABLE account, which is a tax-free savings account available to people with disabilities diagnosed before the age of 26. The total annual contributions each year cannot exceed $16,000 in 2022, but the funds can be used for a range of services such as food, housing, transportation, assistive technology and healthcare expenses. The ABLE Act, passed in 2014, allows people with disabilities to accumulate some savings without disrupting their government benefits.

5. Name a guardian, who will be the person making decisions about the child’s care after you die.

“Parents are the absolute experts on what they think is best for their child, what’s realistic and not realistic for them. They’re highly in tune with what’s feasible for their child, who their child reacts well to, who can articulate and advocate for their child if they are no longer around,” said Dan Moisand, principal with investment adviser Moisand Fitzgerald Tamayo, and a MarketWatch contributor.

6. Name a trustee. This person should be a separate person from the guardian, and they are focused on the finances.

“There should be a person in place to take care of the person and a person in place to handle the money,” Moisand said.

Isenhart added that the guardian and trustee need to work in tandem to ensure smooth care of the special needs child as the age and their needs evolve. “It really is a team approach,” Isenhart said.

7. Consider guardianship, conservatorship or power of attorney options when a child turns 18. They may be legal adults in the eyes of the law, but some children with disabilities might not have the ability to make medical and financial decisions for themselves. The parents may need to assume legal guardianship or conservatorship through a court process.

8. Draft a will. “Not planning ahead of time is the biggest mistake. You have to plan and you have to plan carefully,” Isenhart said. “Do it for your loved ones now.”

Write the will as early as possible and update as needed.

“The biggest mistake I see is that people procrastinate all the time. And with a child with disabilities, there’s added complexities. Families need to exercise some control from the grave. Those with special needs may need help managing their lives and their money and their care for a lifetime,” Moisand said.

Also, take the time to talk through the child’s daily care routine with family members and the assigned guardians and trustees in case something dire happens and parents die unexpectedly.

“It sounds small, but it’s really important. I wish my wife and I had talked more before her death about the millions of things she did and how she did them. It was like jumping into a pond of ice and wondering ‘Where do I start? Who are his doctors, when are the appointments, what does he eat and what time?’ I just wish we had talked more before I was alone,” Jorgensen.

Review the will and trust plans every few years because life changes and complications arise, Tuchman said. “Life is dynamic and always changing. I keep a one-page summary of the key details available at all times. But you need to keep reviewing and updating these plans every few years.”

“The biggest fear that you’ll never get over is that no one will love and take care of them the way we do. You’ll never get over that,” Tuchman said.

Read where originally published by MarketWatch.