Plan for your child, but make sure you’re taken care of, too.
When he was just two-years old, Robin Blackwood’s son was diagnosed with Fragile X syndrome — a genetic condition that causes intellectual impairment and behavioural and learning challenges.
“While I am alive, he will likely live at home and need some round-the-clock care,” said Blackwood, 41, who lives in South Carolina in the US. “I have to save for my lifetime and his lifetime, so it is stressful.”
Although her husband works full-time, Blackwood gave up her full-time job in public relations for part-time work in the same field, which enables her to manage therapy and medical appointments for her son, who is now six-years old. “This doesn’t help my financial security, but it’s what I have to do,” she said.
Fragile X is one of a number of conditions that make it difficult for a child to grow up to be an independent adult. Down syndrome, severe autism, muscular dystrophy, cerebral palsy or severe developmental delays are others which may require long-term specialised care which can be expensive.
“Many parents find themselves supporting their children well into adulthood and are often concerned about their son or daughter’s future when they’re no longer able or around to help,” said Dan Leighton, policy and participation officer for the National Autistic Society in the UK. “It’s very difficult to think about, but preparing for later life is so important, whether it’s saving money or arranging for other family members to take over support.”
If you’re the parent of a child that may need long-term specialised care, here are some steps you can take to make the future (and the present) more financially secure.
What it will take: You’ll need a support network, professional help, the ability to advocate for your child and a solid financial plan. “Seek out planners who have actual experience”,” said Craig Cowles, a financial planner with Cardinal Wealth Advisors in Texas. They will have better insight into your situation.
How long you need to prepare: There is rarely time to prepare for the arrival of a child that will need extra care. For many, the diagnosis comes as a shock. But there’s plenty of planning that can be done to ensure the best possible future for your son or daughter. “Parents need to figure out how to accumulate a nest egg for their child,” said Keith Singer, a financial planner with Singer Wealth Management in Florida. “They need to determine who will be in charge of providing assistance and care to that child if necessary after they are gone.” Singer said they must also coordinate the way they leave their child an inheritance to ensure their child doesn’t lose any government benefits.
Do it now: Find an advocacy group. Getting the right services and support can require jumping through a variety of hoops — and you might not know where to start. Groups that offer information and guidance are versed in how to apply for what you need and can offer support for what is often a difficult journey.
Hire professional help. Everyone needs an estate plan, but it’s especially important for families who must provide care and financial support for a child indefinitely. It’s worth hiring the best professional help available. “These are things that are going to seriously affect your life and the lives of people after you,” said Julia Chung, a financial and estate planner with JYC Financial in Langley, British Columbia, in Canada. “Spend the money.” You will likely need both a financial planner and a lawyer that specialises in estates, and possibly an accountant to review tax ramifications.
Ask about trusts. In some countries, a testamentary trust can be written into your will and is created when you die. They can be used to receive inheritance funds on behalf of your child and managed by a trustee you appoint, Chung said. These need to be carefully structured so the child can still access income-tested government services.
Appoint a trustee who is aware of what is involved in such a long-term responsibility. You will likely have to change trustees during your lifetime—your sister now, for instance, but a sibling of your child’s once he or she is an adult.
Check your beneficiary designations. Some retirement plans and insurance policies allow you to choose who would receive that money after your death. “A lot of parents will name their child as beneficiary on a life insurance policy or IRA,” said Skip Fleming, a financial planner with Lodestar Financial Planning in Colorado in the US who has a daughter with special needs. “But that could eliminate the child from state or federal benefits later in their life.” Name your estate instead, and the money will flow through your estate into any trusts created in your will.
Beef up your life and disability insurance. Talk to a financial advisor about a special mix of insurance products or other safeguards for future needs.
Do it later: Don’t shortchange your own retirement. As with any parent-child situation, you have to put on your own oxygen mask first, so to speak. “So many parents try to sacrifice for their children without thinking about ultimately what that’s going to cost them in the long-term,” Fleming said. “Plan for your child, but make sure you’re taken care of, too.”
Draft a Letter of Intent. This will guide others on how best to help your child when you are no longer able to care for them. “It’s basically an owner’s manual for my daughter,” Fleming said. “What does she like, what doesn’t she like, what are some of her goals, what are her quirks, how often does she visit the doctor, things to avoid. It’s always changing and it’s something you’re always updating.”
Do it smarter: Be sceptical. Getting the right support can be daunting, expensive and emotionally draining. “Unfortunately we have heard of a few cases of parents, in desperation, falling prey to bold claims made about untested therapies and interventions for people with autism, and even quack cures,” Leighton said. “We would strongly advise parents feeling lost to seek out help and advice from friends, family, other parents and charities like ours, and only make decisions based on reliable, robust information.”
Reach out. “There is support out there,” Chung said. “Never be embarrassed to ask for it.”