Adults with disabilities are living much longer than in the past, which means their aging parents must plan for the likelihood that their dependent children will outlive them.
The life expectancy for people with Down syndrome has increased from 25 years in 1983 to 60 today, according to an October 2020 report in the Journal of the American Medical Association. Studies show it is not uncommon for people with cerebral palsy, the most common motor disability among U.S. children, to live into their 50s.
Increasing numbers of children are also being diagnosed with autism spectrum disorder, which by itself does not affect life expectancy but can require lifelong care. And hundreds of thousands of service members, many without spouses, returned home from the conflicts in Afghanistan and Iraq with traumatic brain injuries and other disabilities.
Whether your child will live independently, require round-the-clock care or have needs somewhere in between, this guide can help you put financial resources and support services in place to ensure quality of life when you can no longer be the primary caregiver.
Protect financial assistance, assets
It is essential to preserve your child's access to government assistance programs such as Supplemental Security Income (SSI), which guarantees a minimum income and is available to children with disabilities, and Medicaid, which covers a broad range of health care costs.
Eligibility for these benefits is based on limited income and, in some cases, assets such as savings and investments. For example, individuals cannot get SSI if they have more than $2,000 in financial resources (although not all assets count towards the cap).
The best way to preserve eligibility is to set up a special needs trust, says Michael Gilfix, a Palo Alto, California, lawyer who has been setting up these trusts for clients since the 1980s. Here are some important things to know about these financial vehicles.
• No size limit. Any amount of money can be put into a special needs trust, and the funds in the trust don't count when determining eligibility for government benefits. By contrast, leaving money directly to your child will, in most cases, eliminate their eligibility for SSI and Medicaid.
• Start early. Set up a third-party special needs trust before your child turns 18, if possible. You are not required to put any money into it, but it will be there to protect assets should your child become eligible and require government benefits.
• Follow the rules. If your child receives SSI benefits, money from the trust can't be used for food and housing. However, it can be used for other expenses, such as therapies not covered by Medicaid, or extras like vacations and cellphones.
If your child works, money from the trust can supplement existing income.
• Choose a trustee. One of the most important decisions you must make is designating someone to manage the trust on behalf of your child. The trustee should be someone responsible who cares about your child; this could be a sibling or other family member you expect to live longer than you.
You can also appoint a professional fiduciary to manage the trust or join one of many pooled trusts that nonprofits in every state operate.
• Pair with an Achieving a Better Life Experience (ABLE) account. ABLE accounts, which are built on the same basic structure as 529 accounts used for college and have many similarities, can be established for a disabled person at any time in their lives. But the child must have the qualifying disability before age 26.
Money from a special needs trust can be moved into an ABLE account, and the beneficiary can use it for any qualified disability expense. Your child can manage the account independently and use a debit card to draw money from it; you can place limits on how much can be spent at a time and where.
"The real value is that an ABLE account allows the potential for a lot of autonomy for an individual with a disability,” says Brett Bauch, a Madison, Wisconsin–based financial adviser focused on special needs planning.
What does life look like?
The plans you make should address your child's wishes, and you should involve your child in the process to the extent possible.
• Letter of intent or letter of guidance. The letter is not a legal document but provides key information and instructions about your child's preferences, routines and wishes. The letter can be as detailed as identifying caregivers, medical providers and other people who are and are not a good fit for your child.
You should review and update the letter every two years.
• Supported decision-making. Under this model, your child is in charge of decision-making and chooses a team of trusted advisers, such as family members, friends or professionals, to serve as supporters. State-by-state information on that process is available from the National Resource Center for Supported Decision-Making.
• Power of attorney. In this legal arrangement, someone can make medical or financial decisions on behalf of your child with your child's permission. It is more flexible and less costly than conservatorship or guardianship processes, in which a court appoints someone to be in charge of decisions affecting your child, including where she lives or his estate.
Consider housing options
Where your child will live depends on a number of factors, including the type of disability and the financial resources you can put in place. If your child lives with you, don't wait for your death to have him move to a new home, Gilfix says.
"Get them into a place so they can have support from you and get acclimated, even if it's tough,” he says. “Because if you think it's tough while you're living, it's catastrophic if you're gone. There's nobody there to support them."
• Your home. If you own your residence, you can leave it to your child in the special needs trust, but the trust also should contain enough money to help cover ongoing expenses, property maintenance, taxes and other costs.
• Another home. You can buy a condo or house for your child, and that property can be held in the special needs trust or in your child's name. Supplemental Security Income (SSI) and Medicaid regulations allow beneficiaries to own their home without affecting their eligibility for benefits.
• Section 8 vouchers. The federal program allows people with low incomes to obtain housing in the community, but waiting lists can be long. Centers for Independent Living in each state provide resources, supports and tools for integrating people with disabilities fully into their community.
• Group homes. Disabled adults can use Medicaid payments or private money to live in group homes, where, in some cases, counselors or other staffers often help residents live on their own. Some parents band together to privately set up group homes or apartments for their children.
Elder-care lawyers can help identify options for assisted living.
Parents of veterans
Many military personnel who have served in Iraq and Afghanistan return with serious physical or mental health problems. A large percentage of them are younger than 30 and unmarried.
Plus, they often battle depression, musculoskeletal injuries, post-traumatic stress disorder or traumatic brain injuries. A special needs trust is a tool that some disabled veterans need, but it depends on what type of disability benefits they receive from the government.
• Veterans disability compensation. These benefits are not based on financial need; therefore, a special trust is not required to preserve eligibility.
• Veterans disability pension. These benefits for permanently disabled veterans are needs based. Your child's assets and income determine eligibility, so a special needs trust may be appropriate.
Editor's note: This article was originally published Dec. 19, 2019. It has been updated with more recent information.
Jenny Price is a writer based in Madison, Wisconsin. She has worked as a reporter for the Associated Press and as an editor for On Wisconsin magazine.
7 additional resources
Look to these online sources to point you to people in your area who can give personalized support.
• The Academy of Special Needs Planners, a network of financial planners and lawyers, provides resources on special needs planning and a directory of professionals.
• American Bar Association Home Front offers a directory of programs to help parents of disabled veterans find local legal aid programs and lawyer referral services. These programs potentially can connect families with lawyers — either pro bono or for hire — who can assist with plans relating to guardianship, estate matters and trusts, including special needs trusts for adult children with disabilities.
• The Arc Center for Future Planning offers online planning tools for people with developmental or intellectual disabilities. The Arc, the disability rights group that operates the center, has more than 600 state and local chapters that can help you find additional resources and services.
• Aging and Disability Resource Centers, a part of the federal Administration for Community Living, help people with disabilities and their families learn about and access long-term services and support systems.
• Disability advocacy groups such as the Autism Society of America and National Down Syndrome Society have local chapters that can lead you to specific resources and supports related to your child's condition.
• Easterseals offers help with job training and coaching, employment placement and transportation for disabled adults. It also can help veterans and those with disabilities obtain affordable housing through renting or buying a home.
• The National Academy of Elder Law Attorneys maintains a directory of lawyers with expertise in crafting special needs trusts and other services.
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