Parents generally expect to die before their children do; they find the opposite almost unthinkable. But consider parents of certain children with disabilities — children that require nuanced and abundant personal care, children that will never be able to live independently. For these parents, the thought of their child outliving them can bring out feelings of fear and legitimate concern.
Whom can I trust to take care of my child as well as I do, these parents ask? Who is selfless and caring enough to take on this huge job? And who is responsible and savvy enough to manage the administrative concerns, such as benefits paperwork and financial details?
As a special needs attorney, I constantly talk to parents who are dealing with these questions. I know that many more won’t yet come to my door because they don’t have the answers. I would remind such parents that they are not alone. Even parents of typical children put off drafting a will because they struggle to officially name that guardian. After all, nobody trusts anyone to take care of their children as well as they do.
It’s especially important for parents of children with disabilities to grapple with these questions, partially because they often need to get creative about a solution. In general, there are fewer potential caregivers these days. Families are smaller than they used to be, meaning there might not be a sibling, or even an aunt or uncle, that could serve as a caregiver. Potential caregivers that do exist may have moved out of town. Not only are their roots planted elsewhere, they also haven’t witnessed what day-in, day-out care really looks like lately. Even finding a church friend is a dwindling option, as church membership rates decline.
When there is a sibling that is truly ready to step in, it’s a wonderful solution. If not, parents need to get inventive. First, recognize there are two aspects to caring for your child: the personal care and the administrative care. Your child might have a sibling who would be wonderful at personal care — changing bedsheets, feeding, and generally providing a home — but who can’t manage a checkbook. Or that sibling might be a personal finance whiz but lacking in personal support skills. In these cases, it is possible and preferable to divide the duties.
This role-sharing approach can have some added benefits. Say, for example, you set aside funds for the care of your child and stipulate that remaining funds will be inherited by your designated caregiver. Do you see how that can turn into a conflict of interest? If you set up a special needs trust that names one individual as a caregiver and another individual as a trustee over the funds, that conflict can be avoided. One sibling could be the caregiver; the trustee (or co-trustee) could be a different sibling, a trusted friend, a nonprofit association, or possibly a bank (although banks typically require $1 million or more).
Some thoughts to consider as you go forward:
If you’re eligible for an ABLE United account, get one. It makes the financial administration piece so much easier. In fact, we use ABLE accounts in combination with every special needs trust we create where the beneficiary is eligible (onset of disability before age 26). It’s a convenient conduit for funds: Instead of the caregiver needing to go to the trustee for small expenses — a $25 fee for a weekend day camp, for example — the caregiver can use the ABLE account. Also, when household and food costs are paid for straight from a special needs trust, Supplemental Security Income (SSI) checks can be reduced by one-third. If funds for those household expenses are passed from the trust into an ABLE account and paid from there, there is no reduction in SSI.
Even without a special needs trust, an ABLE account is highly useful because of its returns and its tax-favored status. If a family of relatively small means can save even $20 a week in an ABLE account, they’re going to see returns so much better than they would in a savings account earning 1 percent interest. Save early; save often; save consistently.
Consider ways to create financial resources. Long-term care of a person with a disability can be tremendously expensive. In addition to working robustly and saving robustly (both in your 401k and your ABLE accounts), you might try to explore the possibility of raising private funds through life insurance. Look into what’s called a “second to die” life insurance policy. When the first parent dies, it pays nothing, but when the second parent dies, it pays. For the same premium, the payoff might be $500,000 instead of $100,000.
Seek federal benefits when the child turns 18. Even if you are of means and don’t want to apply for your child to receive federal benefits – you should. When a parent retires and files for Social Security, their child can also receive benefits as a DAC, or “disabled adult child.” DAC benefits may provide a surviving adult child up to 75 percent of the parent’s Social Security retirement or disability check, often reaching $1,500 or more, and consistently above the maximum SSI check of only $750 per month. Proving eligibility is the trick. If you haven’t kept school and medical records — which we recommend you do, and treat them like gold — this can be difficult! If you apply and your child is eligible for Supplemental Security Income (SSI) when your child turns 18, since medical criteria are the same as those to prove DAC eligibility, no one will have to go digging for records. Furthermore, DAC eligibility triggers Medicare, which is taken by 96 percent of doctors and has no lifetime limits. In addition, the adult child continues to be eligible for SSI under a special federal law.
Keep in mind this general checklist, and reconsider it as needed.
- Draw up a will.
- Create financial resources.
- Determine what potential public resources exist and how to position yourself and child to get maximum use of resources.
- Name a future guardian.
- Create a financial management plan.
Get informed. If you’re not yet ready to consult a special needs attorney, be on the lookout for a free seminar at your child’s school or through a local advocacy group. Navigating this world can be complicated, but not to those who deal with it every day. Learn as much as you can, as early as you can, from those in the know, and you can best position all of your children for a bright future.
David Lillesand is a special needs attorney with offices in Miami and Clearwater. Learn more at https://www.floridaspecialneedslaw.com.