10 Common special needs Financial planning mistakes

  1. Failing to plan for assets to go into a special needs trust at the parents’ death.  In order to maintain Medicaid eligibility, assets need to flow to a special needs trust rather than directly to the person with special needs.
  2. Purchasing term life insurance to fund the special needs trust.  Term insurance is not a good solution for a permanent need. Some form of permanent insurance should be purchased.
  3. Drafting the special needs trust so that it is implemented upon the death of the second parent.  It is best if the trust is operational immediately so that there is a place for gifts or bequests.
  4. Funding 529 Plans or other college savings plans in the name of the child with special needs. It is better to fund higher education expenses using an ABLE Account or a special needs trust. The 529 Plan becomes a countable asset of the child in determining Medicaid eligibility.
  5. Ignoring federal and state benefits. Regardless of your level of wealth, having your loved one with special needs qualify for federal and state benefits provides both a safety net and an opportunity for them to access programs available only to those who meet eligibility requirements.
  6. Assuming the same family member should be the executor, trustee and guardian. You want people with the right skills for each role. The best solution may be three different people or more likely some professionals.
  7. Not communicating with all family members about your planning. Proper communication with relatives about why you have a special needs trust will eliminate problems of gifts going directly to the child with special n4eeds and jeopardizing the governmental benefits.
  8. Failing to communicate in detail how someone should care for the individual with special needs after the parents or caregivers are gone. Every individual with special needs should have a care guide. This non-legal document may be the most beneficial thing you leave behind for your family member with special needs.
  9. Parents neglecting themselves in their efforts to provide for their child with special needs. Parents should schedule some time to get away, to re-energize, and to do things they enjoy.
  10. Overlooking the most important things. The time and money spent on doctors, therapists, medicines, legal and financial planning are all valuable. However, it is even more important to hug and kiss your child every day. Knowing that they are loved is one of the most important things in advancing their development.
These recommendations are provided solely as a reference and are not intended to replace counseling from qualified professionals.  Please contact Oak Wealth Advisors if you would like more information about our services.

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