As parents, we all realise it is so important to save for our children’s future. But when you have a child with additional needs, then the Government have placed a few barriers in your way.
Let say out of your child’s Domiciliary Care Allowance or Disability Allowance, and you want to put away €20/€30 each week for their future. It seems like a straightforward thing to do, but here are a few things you need to consider as a parent.
Can you save for your child’s future under the parents’ names?
Any savings in the parent’s name will be means-tested when applying for entitlements such as Carer’s Allowance or Family Medical Card. Some parents I speak to aren’t entitled to any means-tested entitlement because of their income from work, but parents have to realise that when they reach retirement age, the dreaded means-tested comes back into play again.
Another big issue in having savings in the parent’s name is that if you end up needing nursing care when you are older, this can be taken by the HSE to fund the Fair Deal Scheme. So the money you had set aside to fund your child’s Trust can be taken by the HSE to fund any nursing care you may need when you are older.
Are investments for children with additional needs good?
I had a zoom consultation with a couple recently. They met with a large financial brokerage firm who advised them to take out an investment and use a type of Trust (obviously the wrong type of Trust when you have a child with additional needs). After looking at the paperwork, it was obvious the Financial Advisor didn’t know people with special needs are means-tested for entitlement. The product he sold them would have a negative impact on their child’s future access to entitlements.
By their very nature, investments are risky, and who knows what would have happened to the parent’s investment when the next market crash comes. Not to mention the additional charges, fees, commission payments and exit tax these products already have.
Trust Life Policies are a great solution?
A Trust Life Policy is a solution that has none of these drawbacks; we are always trying to make our parents aware of a better way to save for your child’s future.
The key reason the Trust Life Policy works so well is that parents know no matter what happens in the future, their child will always receive the money for their Trust. This is a great way for your child to start putting away some of their entitlements each week without affecting their current or future access to entitlements. Remember, this is not like a pension or savings or investment product that has risk. It is a specific type of life policy that, when you pass away it deposits money into your child’s Trust.
It is a very straightforward way for your child to fund their future quality of life. If you have a question about this area, don’t hesitate to send me an email at allan@financialwellbeing.ie.
