Financial Tips for Families With Special Needs

  • Ken Prodger, CFP®/ChFC®/ChSNC

    What is the sign of a good decision?®

    It’s creating a life care plan for a special needs child.

    A gift of cash from grandma, grandpa or anyone else could end up costing special needs families thousands of dollars in lost government funding and services – benefits that are critical in helping

    families pay the huge expense of caring for and educating their children with special needs. Assets over a certain dollar amount may affect qualification for government benefits.

    Key considerations

    Consider the following tips for families and friends of children with special needs.

    1. Do not give or accept financial gifts or assistance in the name of a child with special needs.
    2. Deposit gifts into a special needs trust that benefits the child.
    3. Be aware: there is no difference between gifts of cash, bonds, stock, property, inheritance, annuities, art and automobiles; they all count against the child’s net worth.
    4. Plan ahead: any of these gifts can legally be given to the trust of a child with special needs and will not jeopardize government benefits if the trust is properly drafted in compliance with any particular state’s requirements.
    5. Carefully monitor the child’s assets. Interest appreciation could increase their account value to exceed the $2,000 limit.
    6. Volunteer to help care for a special needs child, so parents or guardians can have some time to themselves. Caring full-time for children with special needs can be very intense, expensive and demanding.
    7. If your child has special needs, create a “Letter of Intent” to document exactly how you want he or she to observe the holidays and with whom, if you pass away – what type of gifts should or should not be given to them and what kind of life they want. A “Letter of Intent” template is available at: www.massmutual.com/specialcare/resources.
    8. Consult an attorney specializing in special needs planning with regard to the feasibility of establishing a Special Needs Trust and ask a financial professional for help funding the trust.
    9. Review your life insurance, making sure the policy does not benefit the child directly; proceeds that are generally tax free may be paid into the child’s trust.
    10. Offer to become a trustee, a very special personal gift to help families and children who need sincere, reliable, dedicated people to manage their children’s trusts and future.

     Creating a special needs trust is the first step in creating a life care plan for a special needs child. This type of planning is crucial, yet highly complicated and difficult to do without help, because the issues and laws are complex. Services by an attorney specializing in special needs planning are essential. Your financial professional can help assemble an integrated team of professionals experienced in the area of special needs and, ultimately, assist in funding the trust.

    Ken Prodger, CFP®/ChFC®/ChSNC, a financial representative with Miceli Financial Partners, a MassMutual Agency; courtesy of Massachusetts Mutual Life Insurance Company (MassMutual) (California insurance license number: 0F25151)

    © 2011 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001

    Insurance products issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company, Enfield, CT 06082

    The information provided is not written or intended as specific tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

    CRN201301-143562

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