Optimizing Private and Public Resources for Long-Term Financial Security
Raising a child with special needs comes with unique challenges, especially when it comes to financial planning. It's essential for families to explore a combination of private and public resources to ensure financial security for themselves and their child's lifetime. In this blog post, we'll discuss strategies for balancing these resources effectively.
Understanding Private and Public Resources:
Private resources refer to assets and financial instruments owned by individuals or families, such as savings, investments, insurance policies, and retirement accounts. On the other hand, public resources include government-funded programs like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid, Medicare, and other state-specific disability services.
Balancing Private and Public Resources - Finding the Optimal Mix:
Finding the right balance between private and public resources is crucial for families with special needs. The more private resources the parents have or the more their child can generate their own financial resources, the less they may need to rely on and protect public benefits, and vice versa. Let’s delve deeper in this concept:
1. Significant Private Resources:
Families with substantial private resources, such as significant savings, investments, and insurance policies, have more flexibility in how they provide for their child with special needs.
With ample private resources, parents can fund specialized therapies, educational programs, and medical treatments without worrying about eligibility criteria for government benefits.
Although a special needs trust (SNT) may or may not be desired given the private resources available, it is critical you work with an experienced team of professionals to create a well-coordinated and comprehensive plan that’s communicated to the support team. This will help ensure the long-term well-being of your child without any gaps in care.
2. Lower Private Resources:
Families with limited private resources may need to prioritize protecting government benefits to meet their child's ongoing needs.
In such cases, meticulous financial planning is crucial to avoid exceeding asset and income limits that could disqualify the child from receiving essential public benefits like Medicaid and SSI.
Strategies such as spending down excess assets, structuring inheritances, and utilizing ABLE accounts (tax-advantaged savings accounts for individuals with disabilities) can help families preserve eligibility for government assistance while still enhancing their financial stability.
Finding the Middle Ground:
Many families fall somewhere between these two, with moderate private resources and a reliance on a combination of public benefits and private funds.
For these families, the key lies in optimizing their resources to maximize financial security and support for their child's needs.
This may involve strategic planning to ensure that private resources supplement rather than replace essential government benefits, thus providing a higher quality of life and additional opportunities for the child without jeopardizing their eligibility for crucial assistance programs.
Seeking Professional Guidance:
Determining the ideal mix of private and public resources requires careful consideration of individual circumstances, goals, and priorities.
Families should work closely with financial planners, special needs attorneys, and benefit specialists who understand the complexities of special needs planning and can tailor strategies to their specific situation.
By leveraging the expertise of these professionals, families can navigate the delicate balance between private and public resources with confidence, ensuring both financial security for themselves and a bright future for their child with special needs.
The optimal balance between private and public resources varies depending on the family's financial situation, but understanding how to leverage each effectively is key to providing long-term stability and support for children with special needs.
Consulting with a seasoned Chartered Special Needs financial advisor empowers families to chart a course tailored to their distinct needs and aspirations. By tapping into their expertise, families can confidently allocate resources, navigate complexities, and prioritize what matters most.
*The foregoing content reflects the opinions of Van Hulzen Asset Management DBA "Van Hulzen Financial Advisors" and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.