Before his son Josh was born, certified financial planner Larry Altman's specialty was workplace retirement planning. But when his son arrived with the neural tube defect spina bifida, he added special-needs financial planning to his list of expertise.
Today, Josh is a 12-year-old who swims, rides horses and roots for the Minnesota Twins. But after 30 surgeries, he still needs a lot of care and will for the rest of his life. With advances in medicine, people with disabilities are living longer, sometimes longer than their caregivers.
"Parents of special-needs children think about their mortality more than parents that don't have a special-needs child because you do so much for that child and you wonder, 'Who would do this stuff if I'm not here?' " said Altman, a financial adviser and founding partner of Fortune Financial in Minnetonka, Minn.
Making sure a child with special needs will have the financial resources necessary throughout life is a major concern for parents. In a 2008 study of families with autistic children, 74 percent of parents fear their children won't have enough financial support after mom and dad die compared with 18 percent of parents with normally developing kids.
Slightly more than half in the Easter Seals/Mass Mutual study said caring for their child drains their family's current financial resources; just 13 percent of families who have children without autism say that. I'm sure the results would be similar for families whose children have special needs other than autism.
Once the shock of having a child with a disability waned, Larry and his wife, Patti, took steps to guarantee their income by purchasing insurance. While term life insurance is often recommended for young families requiring protection for a certain period of time, usually until a child reaches adulthood, Altman says insurance with cash-value may be more appropriate for a family with a special-needs child because that child will likely need financial support in adulthood as well.
Altman, 51, purchased life insurance for his wife, too. If something happened to her, Larry would have to either quit his job or pay someone to manage Josh's care and take care of their other sons, Zach and Max.
Disability insurance is also important. Although most people don't believe they'll need it, the Social Security Administration says almost one-third of Americans entering the work force today will become disabled before retirement. Families with special needs should purchase as much short- and long-term disability insurance as they can through work and consider an outside provider if this insurance is unavailable at the office.
With the insurance piece in place, Altman then worked with an estate planning attorney specializing in special needs to develop wills and trusts for their kids. Finding someone well-versed in this area is essential because goofing up a key estate planning document can be almost as damaging as not creating one in the first place.
For Josh, they created a special-needs trust, which allows you to take care of your loved one's lifetime financial needs without jeopardizing his or her ability to receive government benefits. Family members can unwittingly sabotage a loved one's financial security by placing assets in that person's name. Such a gift can disqualify a person from receiving assistance, but come nowhere close to covering necessary expenses.
In addition to a planner and attorney, the Altmans suggest appointing a trust company to administer the trust with a loved one as co-trustee and to find a social worker to help navigate county programs and government benefits.
Even with the special-needs planning pieces in place, Altman's job isn't done. In retirement, Altman will most likely need to support himself, his wife and Josh, to some extent. So he saves like crazy. "I'm putting as much money as I can put away into my own retirement plans on both a before- and after-tax basis," he said. He also sets aside as much as he can in 529 college savings plans for his other sons.
Altman wants to "have enough money there so that (Zach and Max) can still live their own lives and still be advocates and loving siblings to Josh."