Keep steadily before you the fact that all true success depends at last upon yourself.

-Theodore T. Hunger

First off, I thought I’d point you to a recent USA Today article which does a good job of explaining the current estate tax mess–as well as the dangers for families with even just $1million in assets:

The article has already received an unusually high number of comments online, so it’s certainly focusing the firestorm.

But today I want to talk about special children.

Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!)

Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.

Feel free to pass this along to families who come to mind, and let them know that we will certainly assist them with their unique situation.

“Real World” Personal Strategy

Planning Your Family’s Wealth Around a Child With Special Needs

Here is the standard thinking, in regards to setting up your affairs with children who have special needs:

Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than $1,000 in assets upon reaching age 18, he/she will no longer be eligible for some government benefits.

However, while these families are indeed on the right track, parents with special needs children also need to:

1. Set up a second trust. The purpose of this additional trust would be so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.

2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.

3. Plan for three retirements. These families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.

I thought these tips were so important that if you find yourself in this situation, you should raise them with your professional advisors. And, of course, we’re here to help.

I’m personally dedicated to the success of your family–and to your finances! Can other tax professionals say that?