Financial and Future Planning for a Child with Special Needs

If it is suggested that your child with autism receive applied behavior analysis, here is something to keep in mind: A New York state insurance law, nicknamed the autism mandate, now requires insurance policies and contracts that provide coverage for those with autism spectrum disorder to cover up to 680 hours of ABA per calendar year.

ABA therapy focuses on building and strengthening a person’s verbal and life skills, while also reducing any interfering behaviors such as repetitive motor and vocal behavior, disruption, and aggression. The mandate requires treatment to be held outside of an educational setting, which allows ABA to be held in an individual’s home, the community, and specialized treatment settings. Exact services depend on the needs of an individual and her insurance.

529 College Savings Plans and Special Needs

Mike Walther, CPA/PFS, CFP, CFA, founder of Oak Wealth Advisors LLC, who assists families in implementing comprehensive plans for their loved ones with special needs, says that while 529 plans have wonderful income tax advantages, they can be disastrous if the child doesn’t continue her education beyond high school and wants to receive public assistance after she turns 18. “The 529 Plans count as assets held by the child and will most likely disqualify him or her from receiving public benefits,” Walther says in his post “7 Financial Planning Mistakes Special Needs Families Should Avoid”.

The best course of action, then, is to transfer the 529 funds to another family member that plans to continue his education.

In the situation where the beneficiary with special needs can’t attend college and there is no other family member to whom the funds can be transferred, “the account owner would need to process a non-qualified withdrawal to access the money saved, and the earnings would still be subject to any applicable state and federal taxes,” says Dan Reyes, head of education savings for New York’s 529 College Savings Program Direct Plan. “For non-qualified withdrawals, a 10-percent penalty typically applies to the earnings (amount included as income), but in the case of the beneficiary having special needs and being unable to attend college, the 10-percent penalty is waived.” 

How to Write a Letter of Intent

The first steps to writing a LOI, what to include, and who should be involved in the process.

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