Myths and realities about financial planning for kids with special needs

Planning for the financial future of kids with special needs can be really overwhelming, not to mention perplexing. I don't know about you but financial anything is not one of my strengths, let alone the kind that involves making sure Max is taken care of as an adult. One word: eeep.

I'm glad to be working with Massachusetts Mutual Life Insurance Company (MassMutual) on a series of sponsored posts about planning, for my sake and yours. The following super-helpful (and very reassuring!) info is from Sal Salvo, a financial pro with MassMutual who is a SpecialCare planner. Experts in the program get advanced training on estate and tax planning, and also learn how to help parents and family cope with the emotional side of planning.

Sal has an adult daughter with Rett syndrome; he got involved in planning soon after she was diagnosed. "At the time, I did it for selfish reasons, so I could better know what I could do for my daughter," he says. "The emotional impact of having a child with special needs can be rough—it takes you out of the logic of planning." Here, he shares common misconceptions parents have about special needs planning, and some key reality checks.

The misconception: "I can just put money away into a special savings account for my child, maybe other family members will help out."

The reality: "If a child has more than $2000 in savings in their name, you will forfeit benefits that child is entitled to once they turn 21. They won't qualify for Medicaid, the program that entitles people with disabilities to housing, transportation, day programs, aides and medical care. Every state has different programs and services, but it's a maze you have to get through. Still, you do not want to have any savings in a child's name—that's why you set up what's called a special needs trust. You become a 'trustee' who can supplement care for a special needs child and make sure the child has a good life, without forfeiting government benefits. For example, a client came in who had a niece in Texas, and he'd left a large amount of money to her. I asked him why he'd selected her and he said, 'She's got autism.' Turns out he hadn't told his brother he had done this—and it could have messed up her benefits. We set up a special needs trust."

The misconception: "I can't afford to do special needs planning."

The reality: "Not all financial services professionals charge fees. And for those who do, fees can vary by region; in more expensive urban areas, such as New York, financial planning fees can start at $2000. That said, money shouldn't be a roadblock to preventing you from meeting with an expert—there's always someone who will be willing to work with you. Some professionals who charge fees may negotiate their price based on family need, for example. Many planners do a complimentary meeting first to lay out costs, and hear what your concerns might be. Just realize that anyone who does special needs planning has to have a predisposition to helping people."

The misconception: "If I already have a will and special needs trust, we're good."

The reality: "Parents get so focused on caring for their special needs child, they forget about themselves. But you must have money for your retirement. It's like that old parable of how when you're on a plane and the flight attendants go through safety procedures, they tell you to first put the oxygen mask on yourself in case of an emergency, then on your child. It's the same with planning for your retirement when you have a kid with special needs. You need to think about planning for two generations, you and your child. Problem is, when you get a diagnosis, you can be in denial. It can take a long time to come to grips to fact that child won't be 'typical,' a tough pill to swallow—for me, it was. When it comes to general planning for your financial future, time is your friend. Start early and it won't be overwhelming."

The misconception: "My child won't need long-term care."

The reality: "You just don't know, so it's best to plan for that scenario. You don't want to delay; when I was trying to get my daughter, then 18, into a residential program before she turned 21, it was a race against the clock. A lot of the places that would accept her were like glorified kennels. So many states have long, long wait lists for residential care and day programs. If you haven't provided for your child and they need care, they could wind up in an inferior facility. If you have a trust, however, you can supplement Medicaid—and also come up with alternate options, like pooling money with other families to purchase a house for your adult kids and hiring aides. And if your child doesn't need that care? If the trust is written properly, the money can be used for big-ticket items like college and buying a house."

The misconception: "I just can't deal with special needs planning right now, I've got too much else to worry about."

The reality: "Having an experienced financial services professional help you plan for the future will give you peace of mind—not only in finances but in other areas, too. We tend to know about great resources in the area, like support groups. I wish I had someone helping me in the early stages—I was like a ping-pong ball, between the emotional ups and downs, the stress of figuring out what was wrong, getting the necessary help and dealing with physicians and educational processes. But you don't necessarily have to be the one in charge here. Moms are often the ones who end up having to keep things together. Get your husbands involved."

This is one of a series of posts sponsored by MassMutual, for which I received compensation. SpecialCare is an exclusive MassMutual program that provides access to information, specialists and financial products and services.