How to do financial planning for a child with special needs

The Economic Times 28/05/2018

Rahul and Deepti’s first born Aryan has been diagnosed with Down’s Syndrome. The new parents have many anxious questions.

How will they pay for the child’s therapies? How can they ensure their child is financially stable as an adult? Who will oversee his care after they are gone? Their anxiety can only be eased by putting in place a financial plan for Aryan. The two have been saving for retirement and Rahul has life insurance. They are also paying off some credit card bill and a car loan.

There are three things Rahul and Deepti need to do. One, budget for expenses related to Aryan’s care and upbringing. Two, review their existing financial plan and make necessary changes. Three, do estate planning to ensure Aryan’s independence.

For budgeting, they have to take into account all costs related to Aryan’s needs, including tutoring, transportation and therapies.Some of the expenses will start immediately and will need to be fitted into the monthly budget. They have to calculate how much his care will cost as he gets older and start saving towards a designated ‘special needs fund’. They have to refrain from taking on too much debt.

Rahul must review his life insurance needs and top up the sum assured. Deepti must also consider taking life insurance, the proceeds of which will come in handy for engaging a care-giver for Aryan when she is not around. They also need to think differently about their retirement. Instead of saving to fund their retirement they have to prioritise building a corpus for Aryan when they retire. They must check out health insurance and other medicare facilities available for special children.

Rahul and Deepti must write a Will, so that a trust structure can be created using their life insurance proceeds to take care of Aryan’s financial needs. They must name a trustee for the same. They also have to appoint a guardianwho will take care of Aryan if they were to die before he becomes an adult. In the midst of the emotional and financial upheaval, Rahul and Deepti may not be able to carry out a sudden course correction. But putting a plan in place will definitely help them strive toward it.