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My son was diagnosed with high-functioning autism at the age of six, and it has an impact on his ability to navigate his day-to-day world.
As a mother, this means I need to think differently about protecting his future.
There are many families raising children with special needs and the level of challenges vary – some are physical, some are mental and, in other cases, both.
After the emotional roller coaster, the toughest part is managing the finances. There are so many therapies and interventions required for special needs children, which often include special schooling. This is not something a parent of a newborn has planned for. In our case, my husband took on additional work whose earnings were earmarked for our son’s additional educational needs.
READ: Money, marriage and children
If your child remains financially dependent on you when they are an adult, you will need to consider this as part of your long-term financial plan.
Their financial needs should be included in any retirement plan you have, and you may need to include additional life cover to provide for them. It is worth working with a trusted financial planner who can help you identify these needs and work out how to provide for them.
USE TAX BREAKS
While government provides no support for families with special needs, it does provide a tax break that is applied to any special schooling or therapy the child needs, as well as their medical costs.
Being able to deduct our son’s school fees and medical costs from our taxable income made his special needs school more affordable.
To claim, you need to have a specialist who works with your child complete an ITR-DD form to confirm that the child is unable to function without special support.
This can also apply to children with severe learning difficulties or mental conditions such as obsessive compulsive disorder or autism.
Items that can be deducted include:
- All your medical aid contributions and all medical costs not covered by your medical aid;
- The salary and meals of a full-time caregiver, should you require one, which are fully tax deductible;
- The fees of a special needs school, should your child be required to attend one;
- The customs duty for an accessible vehicle, which is possibly refundable, should you need to purchase one. The refundable amount can vary between makes and models, so, when buying a car, do your homework as to the maximum rebate; and
- Any changes you need to make to your home, such as installing special railings in the bathroom or building ramps.
MEDICAL SCHEMES
Financial planner Louis van der Merwe of WealthUp says the instinct is to increase your medical aid cover, but this is not always necessary.
First find out if your child’s condition is covered under the chronic benefits or prescribed minimum benefits. These are benefits that all schemes and plans are required to cover.
In my son’s case, it made financial sense to stay on the plan we had and pay for his medication out of pocket rather than spend the extra money on a more expensive plan.
YOUR WILL
If you have more than one child, allocating funds between a child without disabilities and one with disabilities can be a difficult decision. You may feel that you want to give all your children an equal share, however, your special needs child may need more financial support.
Van der Merwe recommends doing a proper cash flow analysis of how much your child would need and making sure that the amount left to them is sufficient.
Van der Merwe says a good option could be to require that the assets be used to purchase a life annuity that will pay out an income to your child for the rest of their life.
Your will should also specify a guardian for your children and, where appropriate, a testamentary trust.
Consideration must be given regarding where the child will live and who will take care of them. In selecting a guardian, it is important that you first discuss this with the nominated person. Being a guardian is not a role everyone can take on.
Lauren Hean, managing director of Appleton Fiduciary Services, says one should also be cognisant of the age of the guardian. What would happen to the child when the guardian passes away?
READ: Your 12-month financial plan
Hean recommends that you consider other options for your child should something happen to the guardian. This could include assisted living if appropriate.
It is recommended that you include a letter of wishes that outline a care plan for the child.
“It is very important that you have an open and honest discussion as a family. Everyone needs to know what plans you have made and why you have made those decisions. That prevents disagreements and arguments,” says Hean.
LIFE COVER
Life cover is a great way to protect your child financially after your death. However, Van der Merwe warns that you need to understand the escalation of the premium of the life cover. There are different premium patterns and guarantees offered by different insurance companies.
Make sure you know that the cover will remain affordable when you retire. There are many cases where people reaching retirement age are unable to maintain the life cover premiums and lose all of their contributions.
