Financially Preparing for Special-Needs Kids

Sarah Palin's son Trig helps spark a national conversation.

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5) Avoid common family-related mistakes. "A lot of parents say, 'How about if I give money to a relative?'" says Harvey. But doing so is a mistake, she says, because not only is the relative not legally bound to spend that money on your child but a creditor or divorce settlement could take it.

Greenberg recalls looking into her options for her son in the 1980s, when the common wisdom held that parents should leave money to their other children, who would then be expected to care for their sibling with special needs. But Greenberg doesn't like the idea of burdening siblings, who have often already experienced so much stress.

Family members and friends planning to leave money to a child with special needs should also be encouraged to do so through a special-needs trust instead of leaving money directly to the child, which could interfere with benefits eligibility. Grandparents may even want to have their wills looked over by an attorney to make sure any gifts don't threaten that eligibility.