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Financial Planning

Managing Personal Finances for Adult Children with Disabilities

It’s not unusual for people with Down syndrome to live into their 60s and those with cerebral palsy to reach 50 years in age.

By Mary Anne Ehlert, CFP.

Improved medical care, educational interventions and community services have given individuals with disabilities a better quality of life and longer lifespans. It’s not unusual for people with Down syndrome to live into their 60s and those with cerebral palsy to reach 50 years in age.

The situation is complicated by refinements in diagnoses of developmental disabilities such as autism. A child who 50 years ago would have been considered “slow” might today be placed on the autism spectrum, which doesn’t affect lifespan but may require a lifetime of care.

So, increasingly, adults with disabilities are outliving the parents who have cared for them over the years. It’s a frightening prospect – so frightening that it’s difficult for aging parents to even think about it, let alone plan for it. As parents approach retirement age, they have so many questions:

·        Will my child be able to live independently or will they require supportive housing?

·        Can they find employment?

·        What about their social lives and potential romantic relationships?

·        Can I even afford to retire?

Parents may be counting on their other children to help care for a sibling with disabilities, but that may not be the best idea. Caring for a person with disabilities costs thousands of dollars a year, potentially jeopardizing the financial futures of those brothers and sisters. Some siblings may willingly take on the responsibility. Others may do so only grudgingly, or refuse outright.

If your clients finds themselves in this situation, it is essential that you consult with an attorney and/or another financial colleague who is up on the latest legal and financial implications regarding care for disabled individuals. And, though there are a lot of things to sort out, they can be put into a few broad categories:

Assets and income

It’s likely that an important share of the child’s future support may come from government assistance programs, such as Supplemental Security Income (SSI), which guarantees a minimum income and is available to children with disabilities, and Medicaid, which covers a broad range of health care and caregiver costs. There are income limitations to these programs, though, so it’s important to protect their access by not letting them inherit the estate.

Rather, set up a special-needs trust. You can set aside any amount of money, and the funds in the account won’t count toward income caps for the purposes of government assistance. Even if they can’t fund it right away, make sure it’s in place in case the child requires government assistance.

If the child receives SSI, the funds in the trust can’t be used for housing or food but can cover medical care that’s not paid by Medicaid as well as provide living expenses such as clothing and little extras, such a cell phone as well as items that provide a quality of life.

A child whose disabling condition was diagnosed before the age of 26, even if they’re older now, is also eligible for an ABLE (Achieving a Better Life Experience) account, a tax-advantaged savings plan similar to 529 accounts for college. In Illinois, taxpayers who contribute to an ABLE account can take as much as a $10,000 deduction if filing individually ($20,000 jointly, limited by the ABLE contributions of $17,000/year in 2023). 

Congress is considering passage of the ABLE Age Adjustment Act, which would protect people who become disabled later in life – for example, a veteran who is permanently disabled in defense of their country – up to the age of 46. As of this writing, supporters are hoping for its passage before Congress adjourns for the year.

Trusteeships and guardianships

It’s not all about the money. The parents – and the child as much as they can – need to designate a team that will provide different aspects of care. Who will be in charge of education and housing? Who will disburse funds from the trusts? Who can help with medical care and physical therapy? Clearly, this is a job too big for just one person, such as a sibling.

Rather, designate a person to coordinate these activities, which can be an attorney, sibling or other trusted agent such as yourself, then give them the support they need to carry out these important roles. Write these plans down – even put them in a visual format like a flow chart so that everyone has an understanding of their responsibilities.

Most importantly, this document needs to be revisited every few years and updated in case, say, a sibling passes away, an agency changes its operations or new legislation creates new opportunities or limitations.

Document, document, document

Some of the most important documents are a durable power of attorney for health care, designating primary and back-up agents who can make health-care decisions on behalf of the individual; an advance directive, stating the individual’s wishes when it comes to health care; and wills for parents and any siblings who will be involved in the individual’s care.

In addition,  document all of the very important and other maybe not so important,  that will allow future caregivers to continue the care plan parents have so carefully crafted after many years of knowing what needs to be done.

In an ideal situation, all of this planning has taken place while the child and parents are still relatively young. But even if the parents are now in their 50s and 60s, it’s not too late to put a plan in place to ensure a bright future for a child with disabilities.


Mary Anne Ehlert, CFP®, specializes in financial planning for families with a disabled family member. She is the founder of Protected Tomorrows in Lincolnshire, Ill., and is a partner in Forum Financial. For information, contact her at 847-522-8086.