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3 Ways to Financially Protect Disabled Adult Children


Increasing numbers of people in retirement are trying to plan for adult children with disabilities.

According to U.S. Census data, 12% of the population has a severe mental or physical disability, meaning the issue reaches into many families. Some of the strategies they are using to provide for their children and siblings are described in a recent Wall Street Journal column.

One possibility is settling an adult child in a group home, but demand for such housing is outstripping supply. “There’s a seven- to eight-year waiting list, and it’s not in perpetuity,” says Paul Harvey, the father of a 30-year-old son with a developmental disability in Orange County, Calif.

In fact, 62% of parents and caregivers don’t have a plan for where the person they support will live when the caregiver gets older, according to a survey of about 5,000 families with children with intellectual or developmental disabilities released in June by Arc, an advocacy group.

In Mr. Harvey’s group, some parents could contribute a generous amount – perhaps as much as $100,000 per family – to put a permanent roof over their children’s heads, and to alleviate the worries of how their children will handle the transition when they die. But that’s not enough to buy a home outright in Orange County, or even to rent an apartment for what might turn into decades, he says.

Mr. Harvey’s group explored building a group home in a development for people 55 and older, seeing “synergies with elder care,” or putting together a co-housing development with manufactured housing, but zoning regulations wouldn’t allow such projects.

Here are some planning possibilities:

Pool your resources. Some families pair up to provide a home for two disabled adults, using a special-needs trust to manage the home, says Deidre Wachbrit Braverman, an estate-planning lawyer in Westlake Village, Calif. Other options: Creating co-housing upon the parents’ deaths somewhere with less restrictive zoning, or leaving a family home to a nonprofit that could turn it into a group home.

Create a special-needs trust. A special-needs trust is a vehicle in which parents can put assets for the child’s benefit without endangering any government benefits, Ms. Braverman says.

Such trusts typically cost $2,500 to $5,000 to set up, says Harry Margolis, a Boston attorney who handles special-needs and elder-care cases. He recommends naming “co-trustees”: One professional, such as a lawyer or a financial institution, along with one family member.

Craft your will carefully. To avoid disqualifying an adult child from getting services, some parents simply leave their other child all their assets in their will – or if there are three children, leave two-thirds to the child who lives closest to the one with special needs. “The local child is going to feel increasingly resentful of the sibling who isn’t pitching in,” Mr. Margolis says. “If that child gets divorced, the money will go up in smoke. Or the child dies, and the money goes to the kids.”

One fix: Give each child an equal share, and put the special-needs’ child’s share in a trust. But given the increasingly unpredictable nature of most investments, you could use permanent life insurance to supplement the trust, he suggests.

Two websites list lawyers who specialize in working with families with children with disabilities: and, which also has a list of financial services companies with practices focused on special-needs planning under “resources.”


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.