Caring for those in Need

Financial Planning for Life’s Pressure Points

As a parent, one of the great advantages of planning for the future is that it provides you with a tangible guide to keep your energy and actions focused on specific goals and challenges at each stage of life for your family. Even with all of life’s uncertainties, a plan will map out the time periods of change, what our practice calls planning pressure points, that lie ahead. This gives you the invaluable tool of time to prepare financially, legally, and emotionally.

BY HN W. Nadworny, CFP®, CTFA | November 2021 | Category: Financial Planning

Financial Planning for Life’s Pressure Points

The special needs planning timeline

When your child receives a diagnosis, regardless of their age, your life will most likely begin on a different course than you had anticipated. To help you chart a path for all the members of your family’s future, we developed the Special Needs Planning Timeline™.

The timeline will provide you with an overview of the key planning pressure points in the lives of all your family members. For example, finding the time when your mortgage will be fully paid and/or when you might begin to receive social security benefits on the timeline, will help you to visualize the stage of life for your child with special needs. You may not know the details of your financial situation at that time, but you can start to build a framework and budget for the future. 

Planning Tips to Think About at Each Stage

Birth to age 3 – All in the Family: While it may sound odd coming from a financial professional, our first piece of advice to new parents is to focus on your child.  When a child receives a diagnosis at birth or an early age, it is key for parents to focus their energy on their child’s and their family’s needs.

Early intervention (EI) services are individualized and family-driven; take advantage of this time to build a framework for the future. Initial steps to focus upon include:

  • Plan for catastrophic events. Create a basic estate plan and include a special needs trust. Purchase life and disability insurance.
  • Complete a Letter of Intent (LOI).  The LOI contains the details of daily living and specific instructions necessary to care for your child. This is information a caregiver needs to have just in case the unthinkable happens. Download a fillable Letter of Intent at
  • Learn who provides the services and supports your child requires, what agencies are involved and who pays for them. A helpful resource: Talking the Talk: Terms and Acronyms Frequently Used in the Disability Community (
  • Network. The personal and professional relationships you form when your child is young will many times deepen and endure throughout both your lifetimes.

Ages 3-14 – Welcome to School: When your child enters school, it may feel as though you have lost control and the professionals have taken over. In addition to advocating for an appropriate educational program and facilitating a social life for your child, there are subtleties to be conscious of.

  • It is important to identify allies to help you advocate for your child.
  • Be aware that there are individuals in the school setting whose philosophies about your child’s development will differ from yours.
  • Review your overall financial situation.
  • Begin to save on a regular basis.
  • Maximize the benefits your employer offers.

Age 14 – Your Child is Transitioning into High School and Government Benefits: Begin planning for your child to enter the world of adult services. At age 18, in the eyes of the law, your child is no longer a child. It is important to plan in advance for this birthday as there are various legal and financial issues that will affect their eligibility for government benefits.

  • Be sure your child has no more than $2,000 in their name (see Federal Benefits below).
  • Begin to consider the steps needed for guardianship or alternatives and supported decision making, if appropriate.
  • It is easy to get overwhelmed thinking about your child’s lifetime needs. Concentrate on planning for your own financial security first. Developing disciplined savings habits for yourself will allow you to continue to save for your child as they grow.

Ages 18-22+ – Your Child is Transitioning to Adult Services AND You Are Able to Save: At age 22, your child’s entitlements through the education system will end but they may now be eligible for various government benefits.

Understanding the Basics of Government Benefits: There are 2 types of government benefits: entitlement programs funded by the Federal government and non-entitlement benefits funded by state governments through appropriation. It is important to know and understand the differences.

Federal Government Benefits – Entitlements

  • If your child meets the definition of disabled by Social Security AND the income and asset test (No more than $2,000 in your child’s name) they are eligible for needs-based entitlement programs.
  • The second type of entitlement benefits require that the parent or the individual themselves have contributed to the fund.

State Government Benefits – Non-entitlements

Your state of residence may appropriate the funding necessary to pay for the following non-entitlement programs. Since funding is limited, individuals may often be prioritized. Understand the process your state follows and advocate in advance.

For more information, read How to Identify, Maximize and Protect Government Benefits at 

At this point, the goal is to have set aside savings to help secure your future and that of your adult child with a disability. There are numerous financial planning techniques to consider that will combine government benefits with your personal resources to fund a full life for your child. Here are a few examples of creative uses of common planning tools. 

Special Needs Planning Strategies

Combining Personal Resources and Government Benefits – The ABLE Account: The ABLE or 529 (A) account is a tax- advantaged account for individuals with disabilities to save to help support their health, independence, and quality of life. 

Keep in mind that the ABLE was designed primarily as a savings vehicle, not an estate planning tool. Here are a few examples of how an ABLE account may be used in special needs planning. All examples are subject to the rules and regulations governing ABLE accounts; please refer to the ABLE National Resource Center at or for details.

  • The ABLE allows the account owner to have savings in their name.
  • The diagnosis of a qualifying disability must be prior to age 26.
  • Families have added flexibility in their savings as they are able to transfer money from a 529 College Savings Plan to a 529(A) ABLE account.
  • Money in an ABLE account may be used to pay for housing expenses without impacting the owner’s social security benefit. A Special Needs Trust (SNT) may distribute funds to a beneficiary’s ABLE account which may then be used to pay for their rent or other housing and qualified expenses.

Using Life insurance to Fund a Special Needs Trust (SNT): There are two ways to fund a Special Needs Trust with life insurance.

  1. Make a properly drafted SNT the beneficiary of the life insurance policy. This may result in the proceeds being included in the insured’s estate. In some states, there may be estate tax due.
  2. When it is important to exclude life insurance proceeds from the insured’s estate for tax purposes, Crummey provisions may be used. We suggest working with a qualified estate planning attorney to determine the best structure to use.

Special Needs Trusts (SNTs) and Retirement Accounts – The Roth IRA: A Roth IRA is a retirement account funded with after-tax dollars. The contributions are not tax deductible but when you start withdrawing funds, qualified distributions are tax-free. There are many rules and restrictions that apply to a Roth IRA as detailed by the IRS (

Grandparents (and parents) should consider a Roth IRA for themselves, rather than funding an ABLE Account, when thinking about gifting options. A Roth IRA would allow the account owners to save with tax-free growth and retain control of the contributions, enabling them to allocate and use the funds when they choose and for any purpose. They may consider making a SNT the beneficiary.

Qualified Retirement Plans – It is important to review the beneficiary designations of your retirement plan accounts. With recent changes from the SECURE Act (effective 1/1/2020), there may be advantages in your personal planning to name your child’s qualified SNT as a beneficiary. Individuals with disabilities who have a qualifying SNT meet the IRS definition of exception beneficiaries.

We hope you have found this information to be helpful. As each family’s situation is unique, we recommend working with an experienced and knowledgeable Certified Financial Planner Professional (CFP®), Chartered Special Needs Financial Consultant (ChSNC ®), CPA, or attorney before implementing the financial planning ideas above.  We have additional information and significant resources to help families plan available for free on our website, Special Needs Financial Planning at 


John Nadworny, CFP®, CTFA is a founder and partner of Affinia Financial Group in Burlington, MA, and the father of James, who is 31 years old and has Down Syndrome. He is co-author of The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child’s Life, soon to be released in its Second edition by Brookes Publishing Co. 

Affinia Financial Group ( conducts business under the Special Needs Financial Planning name. Advisory services offered through Affinia Financial Group, LLC, a registered investment advisor. This content is intended to provide general information about Affinia. It is not intended to offer or deliver investment advice in any way. 

Read the article here.