Planning a Secure Future for Special Needs Children

special needs childrenYour child’s diagnosis might come during one of your prenatal visits with the obstetrician. It might come just after birth, or it might not come until years later. It might be that your child suffers a traumatic injury as a toddler or during the school years. Whenever you first hear your child’s diagnosis, it is devastating. In that instant, your world changes.

In that first moment and into the early days or months of your child’s diagnosis, your focus is on your child’s health, finding all the right people to take care of him or her, and adapting to the changes. You likely are not thinking immediately about how your child will be taken care of 10, 20, 50, or even 5 years from now. As your life settles into its new normal, though, planning for your child is one of the most important things you can do.


While other parents are planning for their child’s college education, the parents of special needs children are concerned with immediate and long-term financial issues. You can prepare legally and financially in a number of ways. Some preparations come with fees; others are free. Getting an overview and tackling the arrangements you can may provide you with peace of mind.

  • Name a Guardian and a Trustee. A guardian is the person who will take care of your child if you and your spouse were to die before your child becomes an adult. The trustee controls the money and handles investing assets thoughtfully and disbursing them responsibly when needed. The trustee also could be an institution, such as a bank or trust company. Consider seeking the assistance of an attorney who can help you begin the process.
  • Write a Letter of Intent. A letter of intent is a document you write that describes your child’s history, his or her current status, and your hopes and dreams for your child’s future. It is not a legal document, but courts and others rely on this letter for guidance in understanding your child and your wishes. Keep a copy with your will, and make sure your child’s guardian has a copy. Be sure to update the letter yearly or whenever something changes. The letter of intent should cover your child’s daily routine as well as daily, weekly, and monthly schedules. It should include your child’s medication schedule, your child’s likes and dislikes, and any helpful community resources. With the letter, create a list of physicians, nurses, therapists, and other medical support. Include their office addresses and phone numbers and, whenever possible, personal addresses, and cell phone numbers.
  • Establish a Special Needs Trust. Protect your child’s ability to access necessary government programs and services by creating a Special Needs Trust. Special needs children and adults are eligible for many governmental services as long as they do not own assets worth more than a certain amount. It is usually $2,000, but in some states, it is as little as $1,000. Without a Special Needs Trust, children or adults with special needs could be disqualified from most governmental programs and potentially could be required to pay back benefits already received.
  • Establishing a Special Needs Trust allows you, your spouse, and other family members to leave money, life insurance proceeds, or property to the trust instead of directly to your child with special needs. This trust also protects against creditors and claims. Your trustee will have authority to use funds from the trust to help care for your child. A licensed attorney can assist you with preparing a trust for your loved ones.

  • Build Your Retirement Savings. As soon as you can, take an inventory of your assets and liabilities. Determine your cash flow. Identify sources of income now (i.e., salary) and any you might have in the future (i.e., federal pension, TSP withdrawals, etc). Set up your budget so that you can keep track of the money that you bring home versus spend. Try applying this same concept in federal retirement, using a retirement budget calculator, so that you know where you are headed.
  • Under FSAFEDS, federal employees may contribute money pre-tax from their paycheck into an account. They can then use that account to be reimbursed for out of pocket health care and dependent care costs. For further information, click here.

  • Write a Will. A will specifies what will be done with your assets after you die. (By having a will, you ensure your assets are left to the Special Needs Trust and not to your child.) If you do not have a will, a probate judge could name your child as a beneficiary of your assets and, in turn, make your child ineligible for federal benefits. Writing a will could ensure the selected guardian is the one who will take care of your child after you are gone. Do not write your will on your own. Your will should be written by an attorney who works specifically with families who have children with special needs and knows your state’s disability laws.


Depending on the type and severity of the disability, your child might be eligible for certain federal and state government benefits, such as Social Security Income (SSI) and Medicaid. The federal Social Security Administration (SSA) is a good place to start to find out about available health-care services. If your child is eligible and receives SSI, the SSA also can help you find state and local resources. State agencies have different names, including Children’s Special Health Services and Children’s Medical Services. Most of these programs offer services through local clinics, private offices, hospital-based outpatient and inpatient treatment centers, or community agencies.

Special needs children who are eligible for SSI may also be eligible for Medicaid, a health-care program for people with low incomes and limited resources. Even if your family has the means to take care of your child without governmental benefits, it is encouraged that you accept the additional available benefits if your child qualifies. Your funds can be depleted quickly when the cost for care of a child who has severe disabilities can run as much as $70,000 a year.

Eligibility requirements differ from state to state. In many states, children who receive SSI payments qualify for Medicaid, but Medicaid is not automatically granted. In those cases, you must apply for Medicaid separately. In other states, Medicaid is automatically granted with SSI eligibility. Still other states require you to sign up for each individually. There are cases in which some children receive Medicaid coverage even when they do not qualify for SSI. It is very important to speak with someone at your local Social Security and Medicaid offices to find out how your state works. Sometimes, your child’s specialty center has a nurse or social worker who can walk you through this.


Now is the time to review your Federal Employee Health Benefits (FEHB) coverage and make sure you understand how it works.

In order for a surviving spouse or special needs children to have FEHB coverage, they must be listed as a survivor annuitant and under Family or Self+one coverage when you complete your retirement paperwork. This will allow them to keep your health insurance coverage in the event that something unfortunate happens to you.

Retirement Benefits Institute encourages you to contact a professional who specializes in the areas mentioned in today’s blog. Developing a plan for any unforeseen events, may better ensure you’re your loved ones are taken care of in the event of your passing.

Benefit Analysts are happy to answer any questions about your current situation and how you can best prepare yourself, your family, and especially your child with special needs for a stable life. That way, all of you can concentrate on ensuring the highest quality of life possible for your child.