{"id":2930,"date":"2025-03-03T11:48:39","date_gmt":"2025-03-03T16:48:39","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-us\/insightsfamily-members-with-disabilities-need-special-planning\/"},"modified":"2025-03-03T14:47:00","modified_gmt":"2025-03-03T19:47:00","slug":"family-members-with-disabilities-need-special-planning","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-us\/insights\/family-members-with-disabilities-need-special-planning","title":{"rendered":"Family members with special needs: How to plan for their financial well-being"},"content":{"rendered":"\n

Most people are uncomfortable facing their own mortality while developing an estate plan to meet the needs of their loved ones after they pass away. But for those who have a child or other family member with special needs, planning for that person’s long-term financial well-being can be especially difficult.  <\/p>\n\n\n\n

\u201cEstate planning for families who have a loved one with special needs can be very emotional,\u201d says Cathy Walker, senior manager of Trust and Philanthropic Solutions at RBC Wealth Management\u2013U.S. \u201cClients are understandably concerned about what will happen to their family member when they\u2019re gone, and they may feel a sense of urgency to develop a plan so they can have peace of mind that their loved one will be cared for.\u201d<\/p>\n\n\n\n

However, traditional estate planning can fall short for these families, who may unintentionally overlook important steps in building a strategy to ensure their relatives are protected and cared for in the future. Planning for a loved one with a disability\u2014whether they’re a child with a physical or cognitive disability, an adult who’s been injured in an accident, or someone who becomes disabled later in life due to illness, addiction, dementia or medical complication\u2014requires a comprehensive and tailored approach to help establish their long-term financial stability and quality of life.<\/p>\n\n\n\n

Why planning matters<\/h2>\n\n\n\n

Almost 45 million Americans live with a disability, representing 13.6 percent of the U.S. population, according to data from the U.S. Census Bureau. Many of the families who care for these individuals don\u2019t realize the importance of documenting their plans for the future, Walker says.<\/p>\n\n\n\n

For example, it\u2019s common for parents to assume that their child who doesn’t have a disability will care for the sibling with special needs. \u201cThe sister may want to take care of her brother with special needs, but she doesn’t necessarily know all the details, such as how much money she can distribute from their parents\u2019 estate without messing up her brother\u2019s government benefits,\u201d Walker says. \u201cOr, sometimes a well-meaning family member will leave money to a child with special needs without realizing how it can jeopardize their eligibility for benefits.\u201d<\/p>\n\n\n\n

Because there are so many rules governing disability benefits, and because a person’s need for benefits may change as they age, expert guidance during planning is crucial. For example, an attorney can set up a special needs trust to distribute payments that fluctuate based on the beneficiary\u2019s need for government assistance. Walker recommends working with an attorney who specializes in planning for families with individuals who have special needs, along with a team that includes a financial advisor and a tax advisor.<\/p>\n\n\n\n

In addition to managing the challenges associated with government benefits, many families also wrestle with how to distribute their funds among various heirs<\/a>, including those with and without special needs.<\/p>\n\n\n\n

\u201cEverything doesn\u2019t have to be equal,\u201d Walker says. \u201cMaybe parents need to put a little more into the trust for the beneficiary who has special needs than for their other children, or maybe they need to set up a life insurance policy<\/a> to go into a trust for the child with special needs and do the rest of their estate planning separately. It\u2019s a balancing act, but there are many ways to see that siblings also receive support or an inheritance.\u201d<\/p>\n\n\n\n

Cover all the bases<\/h2>\n\n\n\n

An estate plan addressing the needs of family members with disabilities will most likely have to be more detailed and extensive than a typical estate plan. Individuals who have special needs may not be able to manage their own care or make critical decisions as they age, so the plan may need to include written directives that go well beyond distributing money, including:<\/p>\n\n\n\n