Planning for specially abled children involves a careful approach covering both financial and non-financial aspects. For these children, the common aspect of money management and personal care becomes a critical point as families ensure that the child’s lifetime care needs are taken care of and their future is secured.
You will undoubtedly want your love, care, and support for your children to outlast you as a parent. Hence, proactive planning and careful consideration of situations with regard to financial planning and money management are of prime importance. While a good estate and financial plan may aim to solve for questions on how to ensure whether the child receives requisite financial assistance on a timely basis, assets bequeathed are passed on in a streamlined manner, and who will be the custodian of the wealth and so on, the softer aspects of who will take care of your child after your demise or in case of incapacitation, where and with whom the child will live in such cases, and whether the appointed guardian will be able to provide full attention to the children still leave room for a foolproof and easy solution.
In situations like these, just leaving behind a will which leads to disposition of wealth and the bequest to specially abled children managed through a guardian may not be the best way for planning their future. Some nuanced planning like setting up of a private family trust is one such way to ensure that the child is able to lead a financially independent and dignified life. The trust can be made operational through a will as well but a testamentary trust will have its own challenges for implementation in cases where the parents are incapacitated. In such cases, the will is rendered ineffective and the trust will not become operational. Besides, if the will is challenged by other heirs, the trust cannot be operationalized. Thus, keeping in mind such situations, it becomes critical for the parents to create a private family trust during their lifetime for the benefit of specially abled children.
A private family trust created during one’s own lifetime helps mitigate some of the issues which can happen if the parents are incapacitated or the wills are challenged, etc. Such a rust should come into operation during the lifetime of the parent and its management handled by either the parents themselves or professional corporate trustees appointed by them.
A private family trust could also assist in achieving other objectives like ring-fencing the assets of the family from any future possible entrants in the life of the specially abled child who assume a influencing capacity. The parents can appoint a board of trustees and plan for their succession in an appropriate manner to ensure that no external party gets control over the assets in the trust.
A well thought through investment policy, keeping in mind the liquidity needs of the child, and a certain corpus to survive the lifetime of the child becomes very critical as well if such a trust is created. A pre-mandated distribution policy and also payout from the trust for the care and maintenance of the child can be formulated and guidance given to the trustees. Lastly, to ensure continuity and to handle the trust administration professionally, depending upon the size of the trust corpus and the complexities involved in the management of such corpus, families can also consider appointing a combination of professional corporate trustees and trusted family members and friends.
Finally, while the creation of a trust may help handle certain concerns pertaining to money management, there is one even bigger challenge that needs to be overcome. That is a dilemma faced by all parents of specially abled children as to who will take care of their children after their demise. With just a handful state-run long-term care facilities available, parents are getting together across the country to make their own arrangements. Many NGOs and institutions are in the process of setting up institutions that will enable the day-to-day care of the specially abled person.
In a famous quote, Robert Kiyoski says “Don’t just protect your child from the future; prepare them for it “. By putting such a plan into effect during one’s lifetime, parents can ensure that the child’s interest are safeguarded financially and that the child is comfortable with any future changes to his ecosystem.
Gautami Gavankar, is CEO-estate planning & trusteeship, Kotak Private Banking.