3 min read.Updated: 26 Aug 2021, 01:22 AM ISTRajesh Krishnamoorthy
A financial plan for those with special needs must address financial and emotional sides
One key challenge that most families having persons with disabilities face is fully understanding the nature of special needs. Before any discussion on how one could make a financial plan in such scenarios, forcing oneself to define what could be the best care possible for the person with disability is the true foundation for all things that follow.
After discussions and due consultations with medical and rehabilitation professionals who would be supporting the person with special needs, one must make a conscious effort to write down the big picture. Writing brings in amazing levels of clarity in thought. Very often, the big picture of best care possible and how it ends up translating into specific action items can substantially save not just time, but also avoid dissonance.
It is but natural that one places the person with disability at the centre of all such planning. However, to force oneself to think of the rest of the family members and the self may need external support. As humans, we tend to think more for our family member who needs help more than ourselves.
With the advancement in healthcare and support, the life span of persons with disabilities is increasing. From a financial perspective, one needs to be cognizant that historical averages may not work while putting together today’s financial plan towards planning the future of the family. Once this clarity emerges, then some of the most obvious questions are:
What are the funding sources for the treatment of a person with disability? Are there government schemes that provide any support or relief? Would this change once the person with disability becomes an adult? Where will the person with disability live and who will oversee his or her care in scenarios where other family members are no more?
A big takeaway from a recent discussion I hosted on this topic was that financial planning in such scenarios spans across two generations. It sums up the effort involved in putting together this plan. With rising costs and longevity, another comment I have heard is that such planning can at a base case provide a life vest to keep the family afloat. That is also a win in itself.
The above are practical considerations, and one shouldn’t get bogged down by the clarity needed. I have always heard from my friends who are financial planners that creating a plan can ease anxiety. The finance plan must address both aspects—the financial aspect and the emotional aspect. So, building savings is a given. That must be done. Besides that, most other matters focus on the ring-fencing and protection of the person with disability from a financial perspective. Let us take a quick look at those.
Indian law recognizes the parents as the legal guardian of their child. However, once the child attains 18 years of age, in cases of those with disabilities, one needs to specifically register as a guardian. There are two key reasons for appointing a guardian—to fill a legal vacuum, and to make informed decisions for persons with disabilities as they have impaired capacity to do so themselves.
While the above takes care of guardianship in the context of the parents being alive, the connected question is, what if the child with disability survives the parents? In such cases, it is very important not just to write a Will, but also to name a guardian in the same document. Besides writing a Will, the India Trust Act also provides for creation of a private trust. There are many families that create a special needs trust and name a trustee. The parents can be a trustee and define who will replace them should there be a demise.
These aspects cover not just the financial perspective, but also require logical thinking and dispassionate creation of contents. The support of a seasoned estate planning professional will be very useful in such circumstances.
It is important to write a letter of intent; do remember, this is not a legal document, but it provides valuable information, including the child’s medical history, doctors’ information and other personal information (such as his/her preferences and habits).
Planning for your child’s independence is an overarching thought in all the above decisions. Given that context, it would also serve well for the guardian to educate all family members about the needs of the person with disability.
This not only helps in the future, if the parents are deceased, but also in the present day context; it makes sure that during social gatherings and interactions that involve a person with disability, everyone around are aware about his/her needs, and a conscious effort is made to include the person with disability as much as possible in the celebration of life.
Rajesh Krishnamoorthy is country head-India liaison office of FPSB Ltd.