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Choose Your Own Financial Story

Those of you now in the position to be planning for the young-adult phase and the adulthood of your child with special needs are probably old enough to remember the “Choose Your Own Adventure” book series. In each book, written in a second-person perspective, the reader is the protagonist. At the end of each chapter of the story, the reader is asked to choose one path out of two or more paths. Each possible path takes the story in a wholly separate direction. Some books have as many as 40 possible endings to the story. Some good and some, well, not so good.

Creating a financial plan is a lot like writing and then reading and re-reading a “Chose Your Own Adventure” book. You and your family member are the protagonists of your story, and each choice you make branches out into other choices and leads to different possible endings. Inflation, the labor market, the stock market, the IRS and the general economy are the minor players that set up the choices for you. This is true for general financial planning and only just slightly truer for special-needs financial planning.

When your child with special needs is young, it can be overwhelming to think about the future. This is not just because you have IEPs and therapists’ appointments and so many other tasks to complete, but also because the child’s future capabilities may seem even more difficult to predict than those of a typically developing child. It can be an emotional and also a practical challenge to walk the line between hoping for future self-reliance of your child with special needs and preparing to provide future support for him/her.

Your child with a disability may grow up to want and need a post-secondary education. A decade ago, there was not much to choose from; but at this point, there are more than 250 options for your child to continue her/his education after high school. Think College ( is a good resource for exploring these programs. In view of this possibility, you may want to open a 529 college savings plan for your child with special needs, just as you would for a typically developing child. It is best to start a 529 plan as early as possible to leverage both the power of compounding and tax-free growth, as well as take advantage of the state-tax deduction for contributing to a 529 plan. Using a 529 plan to save for a beneficiary with special needs is now less risky because a provision in the Tax Cuts and Jobs Act of 2017-2018 now permits withdrawals of up to $10,000/year from 529 plans to pay private and elementary school tuition. So, as the child with special needs grows up and her/his potential becomes more actualized, you can decide with some flexibility how to employ the funds. And if the 529 college savings plan is owned by parents or grandparents, it will not jeopardize the eligibility for public benefits once the applicant is age 18.

Moreover, if it seems likely that the funds accumulated in a 529 plan, will be more than sufficient to cover the child’s/youth’s tuition of any kind, any remaining amount can be rolled into a 529 A or an Achieving a Better Life Experience (ABLE) account. ABLE accounts are only available for owner/beneficiaries who have a disability that started before age 26 and is significant enough to qualify them for Social Security benefits. Even if you cannot predict yet whether your child with a disability will need or want to access government benefits, it is worth it to open an ABLE account so that the possibility remains open. ABLE accounts, used in conjunction with Social Security Work Incentives (which I have discussed in other blogs), can create a strong financial structure for adults with disabilities who want to work but also need support services funded through Medicaid. Like 529 college savings plans, ALBE accounts offer tax-deferred investment and tax-free withdrawals for qualified expenses. Tuition, fees, books, computers and other supplies as well as some additional supplies for a student with special needs are qualified withdrawal expenses for 529 plans. Almost any expense that enhances one’s quality of life qualifies for withdrawals from an ABLE account.

Saving in a 529 plan can prepare your family to cover the future education expenses of your child with special needs. Saving in a 529 A (ABLE) account can prepare a way for your child with special needs to have savings, access government benefits, and also work. But both have limits in how much they can receive annually, in aggregate, and in what kind of assets they can hold. Your child may very well get a post-secondary education and a job but might also need funds for big-ticket purchases such as an adapted vehicle or an accessible home. Or you might want to prepare for the possibility that s/he receives an inheritance that exceeds the annual ALBE contribution limit. Although this can cost several thousand dollars to create and you need an attorney to do it, you probably want to consider a special needs trust—at least one created and funded through your will. There are many ways to fund such a trust that I will discuss in other blogs.

“Choose Your Own Adventure” books were a great success with children because they could read them over and over and explore many different outcomes. A comprehensive special needs financial plan that employs all the above tools and more may not provide as much entertainment as those childhood reads, but it can provide the satisfaction of knowing that whatever the fork in the path, you are in control.

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