One of the biggest stressors for aging parents of adult children with special needs is planning for the future. Parents have to consider the best way to support their child during and beyond their lifetime. Situations like this are complex and require parents to juggle many unknowns such as the level of government assistance they can depend on, their own level of retirement savings, and the best financial products to support their adult child with special needs.
For families that reach this stage in their life, it helps to start creating a plan as early as possible. Families should develop a trusted relationship with a knowledgeable financial professional to assist them in planning for the future. A good financial planner will be able to structure various financial products so that savings can be moved between accounts without risking the loss of government assistance or finding themselves with a significant tax burden. For example, families can establish both an ABLE account and a Special Needs Trust (SNT) to be used in conjunction to pay for living costs, healthcare services, transportations, etc for a person with special needs. An ABLE account allows individuals with special needs to save up to $100,000 without risking disqualification of government assistance programs. Parents can fund ABLE accounts using contributions from a SNT, which is not restricted by a cap on holdings.
Parents with significant holdings in retirement accounts, like a Roth IRA, may also use their savings to fund a SNT that will offer better legal protection of their assets after they have passed. For parents that have Roth IRAs, at the age of fifty nine and a half, they can withdraw from their accounts tax free and use these funds to pay for expenses associated with the care of their adult child with special needs. With all the options available to parents of adult children with special needs, it is highly recommended they reach out to a financial professional that can help navigate their choices and create a robust plan for the future.