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A woman is sitting on the gym floor, holding a laughing child who is lying on her lap with arms raised, on a blue mat with red lines in the background. Both are wearing athletic clothing and appear to be having fun together, capturing a happy moment that underscores the importance of special needs planning.

Balancing Special Needs Planning with Your Retirement

Parents with a special needs child have many of the same wishes as all other parents. They want to make memories, do the best for their family, and prepare their child for the future. They also hope to retire one day with a measure of financial peace of mind.

When there’s a will, there’s a way — and that is true of financial planning for families with special needs. It is true that unique circumstances call for additional complexity in the plan, and that each family requires a personalized look at the financial side of life. Some conditions mean a lifetime of facilitated assistance. Others come with higher healthcare costs and special educational programs.

However, with the right financial planning, estate planning, and legal tools, families can fully provide for their loved ones — while also steering their own financial ships toward retirement and beyond.

Special Tools: ABLE Account

Finding opportunities to build a safety net for the special needs child requires extra effort. Thankfully, there are some great financial tools available.

One example is 529[1] ABLE (Achieving a Better Life Experience) account. This is a tax-advantaged account open to individuals with special needs and their families. It is available for anyone with a special need that arose before age 26. The funds grow tax-free in an ABLE account — and can be put toward any disability-related expenses, including educational or life-training services that may be needed to prepare the child to enter a productive adulthood.

Also, thanks to a recent change in tax law, 529 college savings plans can now be rolled into ABLE accounts (up to a limit of $16,000 per year until 2026). Funds can even be rolled into a different family member’s ABLE account, provided that the beneficiary remains the same.

Special Considerations for Beneficiary Planning

Speaking of beneficiaries: there is a delicate planning balance to be found in the coordinating of beneficiaries for retirement accounts and other financial assets you hold.

Every parent wants to provide for their child to the fullest. However, families with special needs must keep a close eye on annual income flows. Above a certain level, those income flows could potentially trigger a cutoff of Social Security and other government support. Work with an experienced financial planner who can help you optimize your current income needs while balancing the needs of your beneficiaries after they reach adulthood.

Special Estate Planning Considerations

Financial planning for parents of special needs children would be incomplete without estate planning and proper legal protections.

Many families wait far too long to put their estate plan in order. Families with special needs are no exception, and the consequences of delaying this important step could be problematic. Without a proper estate plan, you may inadvertently leave crucial life care planning decisions for your child to a state probate court.

So, make sure to create and update a living will and an estate plan. For many families with special needs, tax-optimized trusts could play an important role in the big picture plan. And when it comes to trusts, small details can make all the difference.

There are first-party irrevocable special needs trusts (which are funded with assets from the special needs individual themselves, such as government funds or an inheritance), as well as third-party special needs trusts (funded by family members and loved ones). If structured properly, both can avoid probate while also not impacting the calculation of means-based government funds such as Medicare and Social Security. It could also be possible to classify a third-party special needs trust as a “Qualified disability trust” by the IRS, which could make it eligible for a much higher personal exemption than a regular trust. This can drastically lower the tax burden on the trust accounts — but only if structured with expert guidance.

Special Commitments to Consider

Consider the time and talents that are given when caring for a loved one with special needs. It can often become a full-time job with no pay. There is research to be done, phone calls to be made, appointments to be attended and a massive system to navigate. Because that advocacy is a full-time job in itself, families often operate on a single income and need to plan accordingly.  Lean on a financial advisor to be your thought partner that asks the right questions for the unique financial planning that comes with special needs considerations. A financial advisor and planning team can drive the completion of tasks by helping guardians prioritize decisions along the way so they can focus on those they love.

Expect to be inspired and motivated in new ways. At SYM, we have been blessed to watch parents, siblings, and caregivers become fast advocates.  It is inspiring to see clients become advocates for their loved one, fundraisers for cures, and  support for the special needs that impact their lives.  Out of the struggles, caregivers very often do great things for the cause in the process.

Balancing Special Needs Planning with Your Retirement

Parents and guardians of special needs children and adults need a trusted financial ally that understands their unique situation. When it comes to balancing the needs of the child and the needs of other family members, begin with the big picture in mind.

It is common to see parents prioritize their child’s needs above their own, especially financially. The good news is that it is possible to strive for balance, no matter the situation. From accessing resources to projecting expenses and savings, our financial planning team at SYM can help. Reach out to a member of our team if you have a question about financial planning or coordinating trust questions with an attorney.

[1] https://www.finra.org/investors/learn-to-invest/types-investments/saving-for-education/able-accounts-529-savings-plans

Disclosure: The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. SYM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This blog is for informational purposes only and does not constitute investment, legal or tax advice and should not be used as a substitute for the advice of a professional legal or tax advisor. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.

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