Tuesday, 17 May 2016

A parent guide to ensure the financial security of differently abled child


Becoming a parent is like a blessing from the almighty. Since the day, a couple is blessed with an offspring, his/her security and well-being becomes the primary concern for the parents. Taking care of your child’s complete growth and development that includes everything from his overall well-being and a good education, is challenging.
However, the parenting can become even more difficult if you realize that your child is special and will therefore need your support throughout his life.
The needs of special children will be a little different, and so will be accomplishing their financial goals. Their obligations may comprise of expenses for their critical care, appointing a caretaker, and providing support for whole of their life. For all this, what is required is a very cautious planning from the parents.
Let us here help you with a few things to keep in mind, while nurturing a special child and his needs.

1.      Choosing a responsible guardian for help:

Despite your child being affected with a disability, no parent will ever wish to outlive their toddler. As a result, you would definitely want to appoint a guardian on legal terms, who will be predominantly responsible for important decision-making on behalf of your child in your absence.

With your elders support in your home, you might miss out giving a serious thought to this option. However, this is much significant for the time when the child grows up. It is important to ensure that there is someone to take care of the child and is also likely to outlive him/her.
If you are skeptical about bestowing the complete custody, giving a defined set of caretaking rights would be very advantageous. Do ensure that the restriction (if imposed)does not excludes your child’s specifics like medical and financial needs.

Also, while appointment assure yourself by doing it the legal way. It will always help to keep such details in written, as an oral communication may sometimes prove to be deficient.

2.      Build a Trust:
Being a parent to a special child might make you worry immensely about his financial security in the future, when you are not there to care. To ensure that your child’s financial needs are well taken care of, consider building a trust for supervision.You can choose to appoint a trustee for the same. This may be your child’s legal guardian or some other reliable person.

A trustee would also be responsible for doing all the paperwork, involving the trust ownership documents and timely compliance of the tax liabilities.

This responsibility should be employed upon a well-researched, trustworthy and able person. Therefore, some people may think of choosing trusted institutions like a bank or a firm. Whoever you choose, be sure about its abilities and credibility. You should also leave well-descripted instructions for the trustee, prioritizing your child’s necessities.

3.      Finance your Trust:
Allocation of funds for your child’s trust, is easily achievable for parents with a high net worth and other assets. However, the question that rises here is on reserving a trust for middle-class parents. To accomplish this major task, you can kick off by listing the child’s most important and recent expenses.

Apart from the immediate needs, you should also keep in mind the future expenditures that may involve the cost of routine equipment (if necessary) or the need for a caretaker. Consider all these expenses, keeping in mind the factors like annual inflation rate.

Upon knowing the target amount, you can then proceed with identifying those of your assets that could be enlisted in your child’s trust. This could include any investments that you have made for your child, or any of your property assets.

You must also be prepared with a decent life cover. This would help in your child’s trust funding in case of your untimely death. Here, a term plan would surely prove to be a good option for considerably accomplishing your targets.

It is a fact that a guardian would not be able to shower the same care as parents. However, even a little care received by your child after you might aid to keep your soul at peace.

The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Director and Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

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