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Financial Responsibilities of Raising a Child with Special Needs

According to a 2018 MetLife survey, parents of special needs children are not adequately securing their financial future. Nearly a third of these parents commit more than 40 hours a week to caring for their child and spend an average of $326 per month on additional out-of-pocket medical expenses.

For families of special needs children, everyday life can be complex, sometimes frustrating, ever-exhausting, and completely different from one day to the next. A special needs child does not ‘grow out of it’. Their unique challenges must be carefully navigated as a parent guiding your child through every channel, river, and ocean to ensure they have the best opportunities in their own reality. With the additional financial responsibilities involved in raising a special needs child, it can seem more like scaling Mount Everest to most.

I have a friend in Australia whose son is prone to violent outbursts due to his disability. When I ask what concerns her most when it comes to her son, she always tells me she wants to be sure he will be taken care of both emotionally and financially after she and her husband pass.

Let’s be serious: nobody wants to attach a dollar amount to raising a child—but the fact remains that it is expensive. Still, with planning and preparation, you can ensure your child has the help they need now and in the future. There are many organisations and services available to make the cost more manageable and give you the necessary tools to make informed decisions regarding your child’s future.

Here are four things parents of special needs children can do to create a more financially secure future for their family:

  1. Prepare for their 18th birthday 

When a child turns 18, he or she is presumed legally competent to make their own  medical, financial and educational decisions. Parents of a special needs child have two options they can pursue to continue their influence over their child’s care  power of attorney (POA) or legal guardianship. Parents should understand the procedures involved and plan ahead to guarantee their child will continue to receive the support and care they need as an adult.

  1. Draft a last will and testament

It is important for parents of special needs children to declare how their estate should be distributed upon their death. An estate attorney can work with you to determine the best distribution of assets regarding your special needs child.

  1. Create a special needs trust

The special needs trust is a means to provide stability and security for children should anything happen to their parent or guardian. Special needs trusts can be funded through multiple means, including gifts, life insurance, investment accounts, mutual funds, and CDs, and they can include real property.

  1. Choose an appropriate trustee

There are typically two choices when it comes to selecting a trustee: a family member or a lawyer. A family member may better understand the needs of the child, is more likely to have their best interests at heart and will not charge fees. However, administering a trust is a complex responsibility. A professional with experience in financial management can make sound decisions when it comes to finances, rather than emotional ones.

A large portion of time spent raising a child with special needs is naturally focused on the child with the most difficulties. One of the greatest challenges faced by larger families is ensuring other members of the family also receive their share of quality time. This was my friend’s other biggest challenge – having to divide her time between children. In the early years, she spoke often about feelings of guilt. 

At the end of the day, it’s hard not to worry about how your child will manage when you’re not around to help support them. The best approach is to address this sooner rather than later, to understand the long-term financial commitment and to create a path to securing their financial future as well as your own.

Carla Seely is the Vice President of Pension, Life and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.


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