Planning for a Special-Needs Child
When Jason and Amanda Purnell found out that they were going to have a daughter with Down syndrome, they realized that they would have to support her for the rest of their lives. The Purnells wrote wills and took out $1.6 million in 30-year term life insurance policies. They were careful to name a trust as the beneficiary because if their daughter, Maya, has more than $1,000 in assets upon reaching age 18, she will no longer be eligible for some government benefits. While the Purnells are on the right track, parents with special needs children also need to:
- Set up a second trust. The Purnells need to create another trust for Maya so that friends and family members can contribute to her care while the Purnells are alive without causing Maya to lose eligibility for federal disability benefits.
- Ramp up savings. The Purnells need a much larger emergency fund than they currently have, and they also need to create a “reserve fund.” They should concentrate on savings rather than paying off debt, especially because the interest rates on their student loans are so low.
- Plan for three retirements. The Purnells not only have to plan for their retirements, but also for Maya’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.
See Paul Keegan and Karen Cheney, Planning for the Care of a Special-Needs Child, CNNMoney.com, June 28, 2010.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.