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  • Posted May 21, 2021

Special Needs Financial Planning For Children And The Grandparents Connection

A common question regarding grandparents when creating financial planning for special needs children.

Q: I came here to talk about my child. Why are you talking about my parents?

A: When you meet us for the first time, you either have a specific question you want to address, you have a list of questions you believe may be simple to address, or you don’t even know where to begin but think we can point you in the right direction.

When we have a free initial consultation, we are listening for the primary reason you sought us out. We are also listening for other priorities within your planning. We will quickly learn in our consultation what we can help you with.

So why are we bringing up your parents instead of the question you initially proposed? You may have mentioned their age, health status or housing intentions, or some belief that includes current assets of theirs in your or your child’s planning. If we feel that those beliefs or expectations need to be explored sooner than later, we might ask for you to talk to them.

If we are also considering the impacts of an individual with a disability inheriting assets, we will want to get more involved than just asking you to clarify with your parents what their plans include.

The things we want to confirm are that any beneficiaries and titling get double and triple checked. With your parents’ permission, we would work with their attorney or one who we would recommend to take any special need into consideration when it comes to who would inherits certain assets.

Now the big question: Why?

It is not because we want to manage your parents’ money, though if they requested that support, we would likely accept. The true reason is that many times a grandparent’s estate plan does not take into consideration the fact that you have the need to establish (or have already established) a supplemental or special needs trust for your child who has a disability. If they were being thoughtful and kind grandparents who named their grandchild as a beneficiary to a life insurance policy, opened savings bonds leaving the beneficiary as you child, or named anything else of value directly to them without being held in trust with specific language to maintain benefits programs, they could jeopardize the planning that you are doing to establish a stable future for your child.

Are they planning to leave a home to a trust that is not written to allow ownership or transfer of a property? Is the trust established and funded to pay for the expenses of maintenance, taxes and any associated condo fees, ect of the home? Are there other individuals in your family who are being disinherited due to the plan, and is there a way to make everyone happy?

Sometimes talking to the grandparents is the most pressing item in a financial plan for someone with a disability and other times, it can be addressed later in the relationship. We want to make sure we do not miss out on an opportunity to avoid a lot of stress by reviewing that plan, before we address your original questions. Don’t worry. We will get to them. Just give us time.

Elements of financial planning we would review with a grandparent:

  • Asset titling
  • Beneficiary designations on accounts
  • Current estate documents
  • Life insurance in-force illustrations
  • Annuity schedules
  • Life + annuity beneficiaries
  • Investment cost basis
  • Asset location review of investments
  • General net worth review
  • Tax efficiency review

Things we might recommend:

  • Retitling assets to a spouse vs leaving jointly owned prior to the death of a spouse.
  • Renaming beneficiaries to allow for a transfer of assets on death that makes sense from a tax perspective.
  • Renaming beneficiaries to explicitly name a supplemental needs trust.
  • Removing the per stirpes designation where appropriate.

Contact Planning Across The Spectrum for neuroverse financial planning services.