Planning for your adult child with autism

April has arrived and with it, Autism Awareness Month. The Centers for Disease Control reports that the incidence of autism among school-age children is now one in 68, (up from 1 in 150 in the year 2000).

Educational support for children on the autism spectrum has greatly improved over the past decades. With early detection and interventions, many children will blossom into fully functioning, independent adults. Others will not, and will require lifetime support. Unfortunately, once a child turns 18, support systems for housing, vocational training and the like are frequently inadequate and difficult to obtain. Therefore, while concerned parents have ample reason to hope for the best, careful planning is prudent. The sooner a thoughtful plan for the child's future is put in place, the more peace of mind parents will have, knowing they are ready for whatever unfolds. 

For disabled adults unable to independently support themselves, there are two main sources of governmental assistance: Social Security Income and Medicaid. Both are means-tested programs. In order to qualify, an individual may not have assets in excess of $2,000. Thus, the central question for my clients who have children or grandchildren  diagnosed with autism is, how to help their loved one financially without providing money that would jeopardize their loved one's continuing eligibility for essential (albeit meager) government benefits?

One option that strikes many parents as logical is to leave money to another child or relative, with the expectation that that the monies will be made available for the disabled child. However, that is almost always a bad idea. Even if the individual you entrust with the funds is devoted to his disabled relative and completely trustworthy, the money could be imperiled if he/she divorces or is sued.

For most parents and grandparents, the best solution to this dilemma is to establish a Special Needs Trust (also known as a Supplemental Needs Trust), with the disabled child as the beneficiary. The trust's funds are not considered the child's available assets and therefore, will not impact negatively on the child's eligibility for government benefits. The funds may then be used for expenses over and above the basics for which the government pays. 

You don't need to wait until you actually have the money to fund the trust. The trust can be the beneficiary of retirement funds or life insurance. Once the legal structure is set up, anyone can contribute to it.

Choosing a trustee for the special needs trust can be a challenge. Although a sibling may seem the most logical choice, remember that administering a special needs trust requires a fair level of sophistication about finances and government benefits. It can be time-consuming, too. Parents often forget that even well-meaning siblings devoted to a brother or sister will eventually have their own lives and careers, and thus, administering a trust can be quite burdensome. A better option may be to appoint a third party trustee, such as a bank, accountant or brokerage firm. The sibling could then be named co-trustee and provide oversight.

If your funds are limited, you might want to look into a pooled trust. A pooled trust is a kind of communal special needs trust run by a non-profit organization. Fees to set it up are generally lower, but there is a downside: unlike a third-party special needs trust, any monies left over in a pooled trust when the beneficiary passes away will generally revert to the state, and cannot be distributed to your family. Read more about pooled trusts in Florida.

Read more about autism, including legal and financial consideration in planning, at Autism Speaks.