Special Needs Planning Series – Part 7: How to Fund Your Special Needs Plan

This has been quite a journey you have embarked on. When you began the journey planning for the future of your loved one with special needs, you may not have seen the light at the end of the tunnel! Now that you can plainly see that light, I am willing to bet that you are sleeping better knowing all that you have accomplished to provide a safe and fulfilling future for your loved one. You have (1) Taken a Candid Look™, (2) Created the Future Map™, (3) Filtered the Legal Options™, (4) Captured Potential Benefits™, (5) Documented the Wonder™, and (6) Began the Transition™. We are not done yet. The next step will consider how we will fund the Special Needs Trust you created in Step 3.

In Step 2 you created a vision of your loved one’s future — where will they live, learn, work and play — and then prepared several cash flows to determine the funds needed to fulfill your vision now and in the future. You also identified various sources of income during several stages of your loved ones’ life. The result of step 2 is a calculation of the amount you will need to set aside in order to ensure a safe and fulfilling future for your loved one with special needs. Click here for a refresher on Step 2.

In Step 3 you worked with an attorney to complete a special needs trust for your loved one. In Step 7 we will consider how to fund the special needs trust(s) created in Step 3. This is an excellent time for you to contact your financial advisor. Although you can complete this step on your own, it is often helpful to have an experienced financial advisor by your side to help guide the process and make recommendations on funding solutions.

First, you should consider which funding options are available to you — where will the funding come from. Some options are: savings or investments; death benefits; inheritance; and other income. Next you will determine which of these funding sources should be allocated to the Trust. It is important to note that in order to complete this asset allocation you will need to change ownership and/or beneficiary designations on each account affected to “The Special Needs Trust of Person with Disability” rather than to directly to the person with a disability. Again, this is something that a financial advisor can assist with.

The result of this exercise will probably show that there is a gap — an amount of need that cannot be covered by existing or allocated future assets. A financial advisor can recommend some solutions for filling this gap. Often, families will use life insurance as a solution. We recommend you work with a financial advisor or insurance professional who has experience working with families with special needs. For assistance finding experienced financial professionals, check out the Directory — our special needs resource database — or contact Protected Tomorrows at info@protectedtomorrows.com for more information.

Additional resources can be obtained by joining Protected Tomorrows’ community of Family MembersClick here for more information about our Family Membership.