Having a child is often a family’s biggest source of joy. But finding out that a child has a disability can quickly turn that joy to worry: worry about the child’s quality of life, worry about the impact on the rest of the family, and worry the child’s future when parents are no longer there to take care of them.
According to the 2010 United States census, millions of families face worries like these as 56.7 million—or one in five—Americans are living with a disability, some of them profound. While health care and life insurance are often families’ primary concern around their disabled family member, and rightfully so, finances are one issue is too often left untended. And this oversight could have real consequences both for the family, and for the person with special needs when the family is no longer there to provide care.
“Negotiating disability is hard enough without having to worry about finances, but it is important to make them a priority,” says Michael Ryan, Principle of Ryan and Associates, a financial firm based in Corona, CA. “As uncomfortable as it may be to think about, thinking about the future is the only way to ensure our loved ones are protected.”
Many families with special needs don’t realize the special considerations that go into financial planning around their particular situation. Ryan notes, for example, that receiving an inheritance—even a modest one—when parents pass on can affect a disabled individual’s eligibility for certain types of benefits. To protect the individual and their inheritance, one option is having the money put into a disability trust that is executed by a responsible party earmarked for the person’s care.
The timing of one’s disability can also have a profound financial impact, particularly depending on the state in which he or she lives. Ryan notes that in some states, an individual born with a disability may receive benefits for which someone who becomes disabled later is not eligible. As well, certain types of care, like speech therapy, may not covered by some insurance plans, so it is important to be aware of these differences when making a selection.
Another important consideration isn’t directly financial, but is a critical part of financial planning, particularly for those with profound disabilities, and that is what is known as a “letter of intent.” While not a legally binding document, the letter of intent does have bearing and weight. It makes the caregiver’s wishes clear, and also details exactly what goes into the disabled individual’s care, from medications, to daily routine, down to their favorite foods—things only the most intimate caregiver would know. Without this, certain information about the individual could be lost. Ryan stresses the importance of completing such a letter before it’s needed. “Unfortunately, the reality is that we will all pass on at some point, so we have to be prepared whether it happens next week or many years from now.” he urges. “Aside from the personal factors, understanding everything involved helps with budgeting and managing the individual’s fixed income.”
Ryan is no stranger to these concerns as his foray into the world of insurance began due to his own family’s experience with disability which brought another concern to the fore: uninsurability. This can be another issues families face as they attempt to craft succession plans. Insurance companies are reluctant to insure individuals with certain disabilities or may charge hefty premiums, so being educated about one’s rights and choices is vital.
In all aspects of finance and, indeed, of life, education is key. To help educate the public, many financial firms, including Ryan’s, hold free information sessions and provide free information via their websites. While it can be helpful to work with an advisor, Ryan is of the firm belief that everyone deserves help and information even if they choose to go at things on their own. “When it comes down to it no one wants to be sold or told what to do,” he says. “However a person chooses to plan for their future, the important part is to do it. Life happens, we have to plan ahead.”