Special Needs Financial Planning Guide

A guide to aid in special needs planning, including information on structured settlements, lump sum payments & more.

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Special Needs Planning

As you begin special needs planning, you’ll want to consider multiple factors, including:

  • Anticipated costs
    • Medical expenses such as doctor visits, medications, surgeries, and therapies. Research what items and services are covered by insurance and what will be an out-of-pocket cost.
    • Equipment such as wheelchairs, walkers, braces, and communication devices. Determine which may be covered by insurance. It’s helpful to research grants and charitable organizations that may offer assistance.
    • Home modifications (wheelchair ramps, bathroom remodeling, etc.). Explore grants or funding available through nonprofit organizations or government agencies.
    • Education which includes the costs of special ed services, tutoring, or specialized materials or technology.
  • Research insurance and government benefits.
    • Review existing insurance coverage and consider supplemental insurance if needed.
    • Look into benefits through government programs such as Medicaid, Supplemental Security Income (SSI), and state-specific programs.
    • Take advantage of the Individuals with Disabilities Education Act (IDEA) for free public education tailored to your child’s needs.
  • Look into financial assistance programs and grants.
    • Many nonprofit organizations offer assistance with the costs of medical equipment, therapy sessions, and other needs.
    • Local community groups or charities may also offer financial assistance or services at reduced rates.
  • Anticipate ongoing or unexpected expenses.
    • Create a budget for regular expenses and include a cushion for emergencies and unexpected expenses.
  • Explore tax benefits.
    • Research potential tax deductions or tax credits such as medical expense deductions and child and dependent care credits.
  • Reach out for professional advice.
    • There are financial planners who specialize in long term special needs planning. Consider enlisting the assistance of one of these professionals.

Understanding Settlement Components

When you negotiate a settlement, you will need to determine how you receive the damage awards. There are several components to consider:

  • Lump sum payment. This is a one-time payment consisting of a large sum of money for use in the payment of medical bills, rehab costs, home or automobile modifications or accumulated debt due to a child’s condition. While it does provide you with a large sum of money, it can be challenging to budget it long-term to cover the ongoing costs of caring for your child. Additionally, interest accrued from any lump sum investment could be taxable.
  • Structured settlement. These are payments made over time in accordance with a predetermined schedule. Structured settlements ensure an ongoing and steady income stream to meet the child’s needs. Because payments are scheduled, it is far less flexible than a lump sum settlement. However, structured settlement payments are typically not taxable.
  • Special needs trust. A special needs trust (SNT) sets funds aside for your child and does not affect their eligibility for government assistance programs like Medicaid or SSI. A SNT ensures your child is secure with the financial resources they’ll need for life. It’s important to recognize that a SNT is complex to set up and should be done so with the assistance of a professional, such as a special needs trust attorney.

Establishing a Special Needs Trust

As mentioned, establishing a special needs trust can be complicated and it’s best left to a professional with experience in the process. When you consult with a special needs trust attorney, they’ll help you determine the best structure for your child’s ongoing financial needs. They’ll want to know:

  • What type of special needs trust you desire? A first-party SNT is established with the child’s settlement assets or personal savings. A third-party SNT is funded with assets from someone else rather than your child’s assets or your income. A pooled trust SNT is managed by a nonprofit organization, made up of the pooled assets of multiple beneficiaries with separate accounts for each individual beneficiary’s needs.
  • Who will be the trustee? Choose a reliable person, bank, or trust company to manage the assets of the trust.
  • How are you funding the trust? Will the funds come from the settlement, additional cash, real estate sales, or other assets?
  • Do you have a trust management plan? This would include investment strategies and a budget to meet your child’s needs.

Contact a Special Needs Trust Attorney at Pintas & Mullins

The special needs trust attorneys at Pintas & Mullins are ready to help you establish a long-term financial plan to care for your child. With decades of experience helping families like yours, we can give you peace of mind in the knowledge that your child will be cared for for years to come. Call or text 800-934-6555 or complete our Free Case Evaluation form online to get started today.

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Yes. Please have an attorney, paralegal, or staff member from Pintas & Mullins law firm or their co-counsel contact me as soon as possible to discuss my questions. They may contact me by email or telephone (including phone calls, text messages, autodialed / auto-selected or pre-recorded calls). I understand that message and data rates may apply and that consent to such contact is not required for use of these services. I also agree to the Privacy Policy, Anti Fraud Policy and online Terms, including its mandatory arbitration provision.
This field is for validation purposes and should be left unchanged.