Millions of families are navigating the challenges of caring for a loved one with special needs. 88% of parents who have children with special needs have not set up a trust to preserve eligibility for benefits such as Medicaid and Supplemental Social Security Income.1 Inadequate planning can result in the loss of essential benefits, housing instability, and gaps in care. The good news is that awareness is increasing: the number of special needs trusts set up by caregivers has grown by 21%, nearly double the number recorded in 2005.2
As a trusted financial advisor, you can make a huge difference for clients who have family members with special needs. You don't need to be an expert on everything, but you do need to know the right questions to ask, how to spot potential issues, and when to bring in specialists. High-net-worth clients, in particular, expect their advisors to be proactive in recognizing and planning for all aspects of their financial lives, including special needs considerations. By making special needs planning part of your overall approach, you'll not only provide outstanding service but also build stronger, more meaningful client relationships.
Understanding the options available
Special needs planning requires balancing access to government benefits with the goal of ensuring long-term financial stability. Key public benefits include:
- Supplemental Security Income (SSI): Provides modest monthly payments, with strict asset and income limits; often linked to Medicaid eligibility
- Social Security Disability Insurance (SSDI): Based on a parent’s work record; generally higher benefits than SSI; no asset limit, but income restrictions apply
- Medicaid and Medicare: Medicaid offers critical healthcare coverage and additional services; Medicare becomes available two years after SSDI eligibility
- Housing and food assistance: Programs such as Section 8 and SNAP can be vital but often have lengthy waitlists
These programs vary by state, so understanding and connecting clients with local resources—such as local ARC chapters—can be highly valuable.
Core planning elements
While you may not be equipped to handle all special needs planning in-house, having a general understanding of what that planning may entail is essential. Effective special needs planning may include:
- Legal documents—Key documents include wills, powers of attorney, healthcare proxies, HIPAA releases, guardianship arrangements, and a letter of intent or care plan to guide future caregivers.
- ABLE accounts—Tax-advantaged accounts for qualified disability expenses. Contributions and account balances must remain within prescribed limits to avoid affecting eligibility for benefits.
- Special needs trusts—Third-party trusts (funded by family or others) are generally preferred, as they avoid Medicaid payback requirements and allow assets to pass to other beneficiaries. First-party trusts, funded with the beneficiary’s own assets, require Medicaid repayment.
- Funding strategies—Life insurance can provide a predictable way to ensure the trust is adequately funded, especially when clients are still building assets.
The advisor’s role
Advisors play an important role in initiating the conversation and helping clients quantify future needs. Collaboration with specialized attorneys, care coordinators, and other professionals is often required. It is also essential to prioritize the parents’ own financial security, as the dependent’s stability relies on the family’s overall plan.
Your tech stack can help. Special Needs Map is a web-based planning tool integrated with Envestnet | MoneyGuide that helps estimate how much money a family may need to leave a child with special needs someday upon passing. It guides the user through an intuitive interface with the necessary questions about the family, the child’s capabilities and long-term needs, and financial assumptions to arrive at a dollar amount. For caregivers who may be overwhelmed by all of the options available, having a visual interface can be helpful and comforting.
Start the conversation
Supporting clients who have loved ones with special needs is an important aspect of delivering truly comprehensive wealth management. Thoughtful planning in this area not only helps safeguard the well-being and future security of those individuals, but also strengthens relationships with clients and their families, extends connections to broader networks, and reinforces a reputation for attentive, holistic service.
Incorporating a respectful question about whether a client has a loved one with special needs into the discovery process can open the door to meaningful conversations. Even without deep technical expertise, advisors can provide significant value by listening with care, acknowledging unique circumstances, and introducing trusted specialists when appropriate.
Special needs planning is an essential part of serving clients with empathy, foresight, and excellence.
Empower your clients to be active participants in the planning process at www.envestnet.com/financial-planning
