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Financial Planning For Children With Special Needs

October 2019

By: Chris Risenmay, CFP®

Parenting brings both the greatest joys and the greatest challenges to a person’s life. And parenting a child with special needs only exaggerates both extremes of the emotional roller coaster. On top of that, the effects of parenting are not only emotional but financial as well.

Several years ago, the Department of Agriculture estimated the cost of raising a child from birth to age 18 to be around $235,000 (*1).  For a special-needs child, it can be four times as much. Autism alone costs our nation around $268 billion a year, (*2) and Autism Speaks, an advocacy group, estimates the cost of caring for an autistic person to be about $1.4 million to $2.3 million over their lifetime. (*3)

As such, it is vital for parents of special-needs children to take financial planning seriously. Here are some steps to take when planning for the care of your precious child.

Look For Support Resources

It’s the American way to be both self-sufficient and independent, but that’s not wise when you’re raising a special-needs child. Trying to do everything on your own will quickly lead to emotional, physical, and financial burnout. It is important to seek outside help, from people that can assist in caring for your child, to support groups of others who understand what you’re going through. On the financial side, there is help available to you as well.

Supplemental Security Income

Supplemental Security Income (SSI) is a federal income supplement program that provides cash to meet basic needs for food, clothing, and shelter (*4).  If your child meets the Social Security Administration’s definition of a disability, then they may qualify for assistance. While your child is under age 18, Social Security considers all household income when determining eligibility. Once your child turns 18, benefits are calculated on his or her income alone (*5). 


Medicaid is federally funded, but it’s administered and operated by the State (which means eligibility may vary from state to state). In most cases, if your child qualifies for SSI, they’ll qualify for Medicaid too. Medicaid funds can be used for healthcare expenses, home health services, medical equipment, and more.


If you are not eligible for Medicaid, the Children’s Health Insurance Program (CHIP) may be an option. A joint state‒federal effort, CHIP goes by different names depending on the state, but it helps parents who earn too much for Medicaid to provide health insurance for their children.

Even if you are not eligible for some of these government programs, your child may be when he or she becomes an adult. It’s important to learn about the various programs and develop a plan to help your child take advantage of them once they reach age 18.

Non-Profit Organizations

In addition to the government, many other organizations and nonprofits offer help. This can be through grants and scholarships or assistance in finding such financial help. Some organizations to look into are the Arya Foundation, Different Needz Foundation, First Hand Foundation, My Life Without Limits, Parker Lee Project, Wheelchairs 4 Kids, and the Humanitarian Foundation (*6).  Whatever your child’s particular condition, there is probably an organization out there that specializes in it and offers assistance.

Set Up An ABLE Account

As one would expect, having special needs creates more expenses throughout a person’s lifetime, regardless of age. Just as many parents want to save toward their child’s college education, parents of special-needs children often want to save toward their future expenses.

The problem with saving for special-needs expenses is that usually having assets will make an individual ineligible for government aid. This, in essence, punishes children whose parents try to be proactive about their future needs.

ABLE accounts were created to combat this. They work much like 529 college savings plans, where people can save for a beneficiary’s future expenses in a tax-advantaged account. The difference is that these accounts are only available for special-needs kids and the money is to be used for their future care rather than for college. In addition to tax-free growth, ABLE accounts are not counted against an individual when determining eligibility for government assistance.

Consider A Special-Needs Trust

Another way to fund a special-needs person’s future without putting government benefits in jeopardy is through a special-needs trust. Trusts are more complicated but also provide more opportunities than an ABLE account.

Whether it is a first-party or third-party trust, stand-alone or pooled, there is likely a type of special-needs trust that will fit your situation. Unlike an ABLE account, you will probably need to work with a professional to set up a special-needs trust. A competent financial professional or attorney can help you determine the best kind of trust for your situation and also help you set it up.

Plan For The Future

Get Life Insurance

One last thing all parents need but that’s even more crucial for parents of special-needs children is life insurance. What will happen to your child when you are gone? Having a life insurance policy in place will ensure that your child’s financial needs are met in case something happens to you. Whether you need whole life or term life insurance will depend on your personal financial situation and your child’s needs. A financial advisor can help you review your options and determine the best policy for you and your family.

In addition to insuring the parents’ lives, it might be a good idea to insure the special-needs child’s life as well. Families often make huge financial sacrifices for the care of a special-needs child. A life insurance policy could not only pay for burial expenses in the event of early death but could help provide for the retirement and future of a family that poured everything they had into the future of their special-needs child instead of planning for their own future.

Write A Letter Of Intent

You know your child better than anyone. If anything were to happen to you, you’d want your friends and family to be aware of all those personal details. A Letter of Intent does just that. While this document isn’t legally binding, it does include incredibly helpful information, such as:

  • Your child’s daily, weekly, and monthly routine
  • Your child’s personal likes and dislikes
  • Your hopes and dreams for your child
  • Your child’s medical history
  • Contact information for doctors
  • Any other pertinent information

Set Up Adult Guardianship

Once your child is 18, they’re legally an adult in the eyes of the law. If you foresee your child needing guardianship beyond the age of 18 (because they’re unable to make their own medical and financial decisions), speak with a professional about how you can become their legal guardian. This process may include creating a power of attorney or healthcare proxy in the event of an emergency. 

Don’t Do It Alone

Parenting a special-needs child can be overwhelming in and of itself; contemplating the financial ramifications of doing so can be even more overwhelming. We at Cypress Wealth Services welcome the opportunity to help you navigate through these complex financial issues and provide you with resources tailored to your unique situation. Get in touch with us today by calling 866.888.6563.


About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.