Pension planning for a special needs dependent

BuildTheWall

Hi,

Are there any suggestions or tips to share when you are planning finances for the long term, considering a special needs dependent?

Currently am investing any earnings over 50k into pensions, with a plan to use the tax free amount to pay off the mortgage upon reaching 57. The mortgage is expected to be 200k at that time, if we dont prepay. The other option is to downgrade to a small flat which will give us more flexibility in finances.

Step 2 would be to convert part of taxable part to annuities when interest rates are high, to reduce uncertainty and focus more on taking care of the special needs child, rather than spend time worrying about drawdown strategies. Can annuities be passed on to dependent children after the spouse? 

Are there any things I need to consider financially for the dependent child's care if either I or partner are unable to take care of him? Can the annuities be directed towards a care home? 

Am not counting on state pension as am still 15 years away from retirement and it could be means tested by then. I expect travel expenses would be minimal unless the child grows out of the behavioral issues, but offset by therapy costs if we can afford it. 

Marcon

BuildTheWall said:

Hi,

Are there any suggestions or tips to share when you are planning finances for the long term, considering a special needs dependent?

Yes. Get proper professional advice as early as possible. People here don't know your full situation (nor would it be wise or desirable for you to overshare on a public website, which happily you've avoided) and can only give general comments, although input from those who have a disabled child and have faced the same problems are likely to be rather more valuable than well-meant comments from others.

There's a lot to think about, neatly summarised here: 
https://www.irwinmitchell.com/news-and-insights/expert-comment/post/102jbol/future-planning-for-children-with-disabilities-and-additional-needs 
and https://secure.mencap.org.uk/en-gb/download-mencaps-wills-trusts-guide?utm_source=google&utm_campaign=1766811505&utm_term=special%20needs%20trust%20information&gad_source=1&gad_campaignid=1766811505&gbraid=0AAAAAD-szlgbliB1s-rI67ayqIlmRBfqZ&gclid=Cj0KCQjwuvrBBhDcARIsAKRrkjfaCkFq7WNny0_cRnkogWNLcrFMdF9uiKIAIXGWA-fD5yjHUDuBqn0aAtEaEALw_wcB

For a possible choice of adviser(s), see https://www.step.org/about-step/public

Albermarle

It depends on the level of disability, but if they are unable to work for example, and get ( or are likely to get) ongoing benefits payments, then the usual advice is to make sure they have a low level of assets/income, so they do not lose their benefits.

Are there any things I need to consider financially for the dependent child's care if either I or partner are unable to take care of him? 

One way for the future is to set up a disabled persons trust in your will ( if they are eligible)  These have special treatment compared to other types of trust, and money can be dispensed to the disabled person by the trustees, without it affecting benefits as long as all rules are followed. 

In fact once the child is 18, they are theoretically not your responsibility anymore. If they can not look after themselves, they become the responsibility of social services. Although in practice you might well be still actually the ones looking after them on a day to day basis. If that became impossible, Social services would be obliged to take over, although you would still be able to have some input.

Can annuities be passed on to dependent children after the spouse? 
 Can the annuities be directed towards a care home? 

I would think neither of those would be possible. Even if it was it would bump up the cost of an annuity significantly.

Am not counting on state pension as am still 15 years away from retirement and it could be means tested by then

It is not sensible to discount income from a state pension. It would be hugely controversial to  means test it,  and whichever political party did that would be writing a suicide note for the next election, so it would be unlikely to happen for that reason. Just look at the fuss over the £200 Winter Fuel payment and how politically unpopular means testing that has been.