General queries how to approach financial planning for a special child’s future

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  • Every family has concerns about the needs and care of their child in their absence. This concern requires urgent attention especially in families with a child who has special needs. It is good to be prepared to ensure the child's future is secure in the absence of the primary caregiver. We present to you a financial planning awareness series about various processes that you need to be aware of when securing your child's financial future.

    Part 1 of series - Tips on how to approach financial planning for your child's secure future


    DISCLAIMER: Please note that this guide is for information purposes only. Please consult a financial advisor for any legal consulations or advise pertaining to your  financial planning needs.

    Whom do I approach for financial planning of my child’s future? Who are the correct professionals for this?

     A financial Planner (Firm, Individual) who has an understanding of the life and needs of a family with an individual with special needs. Another person who can help is an Estate planner (firm, individual). Both professionals are qualified to guide you with drafting a Will, trust, LOI and Guardianship documents. A lawyer who has experience in the relevant field, is also qualified for drafting legal documents catering to the needs of a family with special needs. However, a lawyer may not be qualified to advice on complete estate plan for your family.

    What are the common employer benefits I can look into, to maximize my benefits and for optimizing my savings?

    Some employer benefits which can help in accumulating good corpus, such as EPF (Employee Provident Fund), Superannuation (future pension), Gratuity, NPS (New Pension Scheme). Other benefits (schemes), include Group Life Insurance, Health Insurance and Disability Insurance which provide good coverage for managing personal risk.

     

    Who can be appointed as the Executor of the Will, and why?

    There are no restrictions on who can be appointed as an Executor. Family/friends/relatives or even a company can be appointed as executor of the Will. The main role of the Executor is to ensure the specifications of the Will are adhered (followed), and played out as stipulated. If the Will goes for the probate process the Executor is the person who has to oversee the entire process. All assets are in control of the Executor till he/she assigns the assets to the person inheriting the assets. It is important to have one, or else court will appoint an administrator in cases where the Executor is absent.

    Does a Letter of Intent (LOI) need to be registered?

    No. An LOI is not a legal document. It is just a diary entry of your child’s life. It is meant for providing information that will be helpful to the Guardian. Every parent is highly recommended to draft this document for their child's future caretakers.

    Can a grandparent or family member pass on inheritance to a special needs child directly, or need to go through the parents?

    Though they may pass on inheritance directly, giving away assets to a special child is not recommended. This is especially tricky when the child is unable to make a decision on his/her own. Gifting anything is best done through the appointed Trust. If the Trust is not appointed then it is best to pass it onto the parents.

     

    Are there life insurance policies for a special child?

    There were two policies from LIC up until 2014 (Jeevan Aadhar and Jeevan Vishwas). But, there are no policies available now.

    Note : We are constantly updating our sources on information for schemes and policies catering to children with special needs. Should you know of any then please do not hesitate to let us know by emailing us at contactus@nayi-disha.org or leave the information in the comments section.

    Should I declare my child’s disability in my health insurance plan?

     If you enroll for a family health insurance package and do not declare your child’s disability, then you run the risk of losing the insurance (not just for the child but the entire family) upon discovery of the child’s disability later on. This is highly discouraged. Do declare the disability when applying for one.

     

    What is a disability certificate and what role does it play in the financial planning process?

    A disability certificate is an official legal document that confirms and states the child’s disability. You will have to attach this certificate for all legal processes that are part of the financial planning process (e.g. for Legal guardian certificate). 

    Is a disability certificate required for making the Trust deed?

    No, a disability certificate is not required for making the Trust deed. But you can be asked to produce one during registration of the Trust. It is always good to have one on hand when initiating legal proceedings of any kind for your child, as a safeguard measure. 

    What is the Swavalamban health insurance scheme, and how is it different from the Niramaya insurance scheme?

    The Swavalamban health insurance scheme is not for a disabled dependent, but for the person with disability (PWD) themselves. This is a critical difference from Nirmaya insurance which the caregiver takes for the dependent who is disabled.

     

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    Jitendra P.S.Solanki
    MBA (Finance), Certified Financial Planner, Chartered Trust and Estate Planner
    Exp: 6 years 9 months