Women Wealth & Wisdom - Raising a Child with a Disability

Those who care for loved ones who are physically or mentally disabled understand how much time and attention are required to maintain their quality of life. And, they worry about what will happen to their dependents when they are no longer there.


For women, who are more likely to be primary care givers(1), this can be an even greater concern.


Nationwide, more than 90 percent of families with special needs children have additional expenses when compared to families who do not2. 


The extra costs stem, in large part, from therapy, medication, and other necessary treatments.


Planning for the future can help alleviate some of this worry. An important item to consider is establishing a special needs trust (sometimes called a Supplemental Needs Trust or SNT). Most people with physical and mental disabilities depend on government assistance in the form of Social Security, Medicaid and other government benefits, to fund education and training programs. Establishing an SNT can help preserve their rights to continue receiving governmental assistance.

Without an SNT, your dependent could be inadvertently cut off from government assistance. The Federal law stipulates that a special needs individual cannot have assets of more than $2,000 in total. That means they should not be name as a beneficiary in a will, life insurance, or retirement fund. Instead, all benefits should be assigned to the SNT.

An SNT should be drawn up by an attorney who specializes in this type of estate planning tool and it should be reviewed by the Social Security Administration for compliance with all special needs trust law. Such a trust will require a trustee who can be either an individual or an institution. The trustee will oversee the funds in the trust and determine how the money is to be used. If the special needs individual cannot make medical and lifestyle decisions for him or herself, then the caregiver must also appoint a guardian.

Funding for Special Needs dependents

Working with your financial professional and other professionals, you will need to determine how much money is required to fund the SNT. While basic living and medical expenses will most likely be covered by government benefits, the trust will provide quality of life items, including personal care attendants, out of pocket expenses, rehabilitation, as well as goods and services that can make life more pleasant. One way to determine how much funding is necessary is to estimate current expenses related to the dependent and projected future costs, along with his or her life expectancy. 

After establishing the approximate size of the trust, the next question is how to fund it. One common way to fund an SNT is with life insurance.  Your financial professional can help you decide the best type of policy for this purpose.  For example, if there are two caregivers (a mother and father, for example), a second to die or survivorship policy, which only pays out when both named policyholders die, may be an appropriate choice for you to consider. 

An SNT can also be funded with investments, retirement plans, real estate and other assets but you need to be careful not to drain assets you may need yourself. It’s important to assure your own financial well-being, since you will continue to be the caregiver. However you fund the plan, you should review it regularly, particularly after major life events, such as births, death, divorce and marriage.

In addition to your plan for your special needs beneficiary, it is also important to meet with your legal advisor and draft a letter of intent with instructions to trustees and guardians outlining such issues as health care, education, living arrangements and other items.

Careful planning is a must in order to reach any financial goal,. For those who care for dependents with special needs, planning for the future is more critical since failure to establish provisions could actually be detrimental to the person you want to help. That’s why planning now will help ensure a brighter future for loved ones who are dependent on your care. 

For more information about preparing for your financial future, visit the AXA Equitable Online Learning Center.


Useful Resources & Links:

1) U.S. Department of Health & Human Services, “Caregiver Stress,” May 2008.

2) 2008 Pediatrics Journal, Paul T. Shattuck, Ph.D., professor of social work at Washington University in St. Louis

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AXA Equitable Life Insurance Company (AXA Equitable) (NY, NY)

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© AXA Equitable. Made available by Carter Rowles: http://www.carterrowles.myaxa-advisors.com. Carter G. Rowles, Financial Professional; CA Insurance Lic. #OE16048; 9606 North MoPac Suite 950; Austin, Texas 78759; Tel: 512-794-2327. Please be advised that this document is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from and independent tax advisor.