Terry Savage: Securing the future for a child with disabilities

Could you make a financial plan to provide for three instead of just two lifetime retirements?

That’s exactly the challenge facing parents of children with disabilities, according to Mary Anne Ehlert, founder of ProtectedTomorrows.com. These families must plan not only for their own retirement but also for the lifetime care of a person who may not ever be able to make decisions totally on their own.

Ehlert recognized the issue early in her life, as she took on the care of her sister with a disability. Thus was born Protected Tomorrows, a planning community that has expanded over the years to include individualized advice and investment management, connection with trusted legal professionals and advocates, and a vast online “Parent University” tutorial program with advice for the myriad challenges that face the families of those who will always need care.

Although government benefits and programs have expanded, if the family doesn’t understand the legal restrictions and offsets, their good intentions might disqualify the family member from some of these benefits. Protected Tomorrows exists to serve the families of children and adults with disabilities.

The major challenge

Ehlert continually takes a positive view of the future, one that assumes success, not despair. As she explains the concept, “Protected Tomorrows helps the family identify the best thing that could happen for their family member, and helps the family identify their biggest fears.”

Ehlert says this is the starting point for creating benchmarks so the family can move forward and figure out what pieces to put into place. She points out that “once we know what success — and failure — would look like, we can create a plan that keeps parents secure and builds a care plan for a minor child, a plan that lasts through adulthood.”

The first step is making sure the parents are financially secure, a necessary foundation for caring for the child. So the planning approach covers savings and investments, health, life and long-term care insurance, and documentation that goes beyond estate planning to include longer-term considerations such as when to take Social Security.

Critical issues

Setting up a special-needs trust is a first step. That trust allows for the child to be helped with certain financial needs while not disqualifying him or her from federal and state benefits. The trust can be funded with gifts, an insurance settlement or the proceeds of a life insurance policy down the road. If done correctly, it can build assets, while still allowing the child — and later the adult — to qualify for government programs, even after the parents’ deaths.

Another important tool is the ABLE Account, which allows you to save tax-free for a wide variety of qualified expenditures while maintaining federal benefits such as Supplemental Security Income (SSI) and Medicaid. The individual with a disability owns the account, but an authorized person may open and oversee the account. You can save up to $18,000 in 2024 — individually or with the help of family and friends. Tax-free withdrawals are made for a wide variety of allowed uses.

And an extension of the program — ABLE to Work — allows the beneficiary to save even more than $18,000 if working and not otherwise saving for retirement.

A family plan

Even setting a lot of money aside with good planning won’t buy the ultimate peace of mind, which comes from knowing that this family member will always have a caring and trusted adviser. Ehlert stresses that this must be a family plan — with siblings and others each taking on a different aspect of the task, from distributing money to planning vacations and dealing with medical issues. Critical to its success is sharing the most basic details of caring, such as where to purchase special easy-access clothing for the child — or creating lists of names and phone numbers of reliable support in case of emergency.

In small families, it’s especially important to create a relationship with a bonded trustee who will handle all these tasks in the future, not just dole out the saved money. Protected Tomorrows can assist.

Challenges persist and worries increase as a child with special needs moves past the high school years into adulthood. Thank goodness one expert financial planner has built this Protected Tomorrows system to guide families through these issues. And that’s The Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2023 Terry Savage. Distributed by Tribune Content Agency, LLC.