The Moneyist: I’m 60 and a single mother. My daughter, 17, has a developmental disability. How do I make sure she’s taken care of after I’m gone?

At 17, she struggles to read at a second-grade level, can only do basic addition and subtraction, and will graduate high school in a couple years with an alternate diploma. She is a 10- to 12-year-old developmentally, and isn’t likely to progress beyond that.

I am nearing 60 and have physical problems, which make it impossible for me to work full time. I receive disability along with a pension (I took early retirement when my health failed.) 

My daughter also receives disability as my dependent. My understanding is that when I pass away she will continue to draw disability. My pension ends upon my death. I currently have $125,000 in life insurance with her listed as the beneficiary. 

I also have a house with a $200,000 mortgage and $50,000 equity, but it is a split level and I really need a single-level home due to my health issues. Almost all my other bills are paid off, and I want to be cremated to keep my final expenses as low as possible for her.

I want to protect my daughter’s future. We are focusing on life skills for her, but she will likely always need strong support and guidance in almost everything. We have discussed it, and she understands that she will likely need a conservator to help her manage her finances. 

What makes the most sense in terms of my house, protecting her inheritance and her disability income, and at the same time giving her what autonomy she can handle?

Concerned Mama

Dear Concerned,

It’s rare that I receive a letter that exemplifies love, thoughtfulness and compassion. While many people ask, “What about me?” your only question is, “What more can I do to help?” It’s a reminder that a life is best lived in the service of others, and your story helps replenish my faith in people.

An ABLE account is a savings and investment account similar to a 529 college savings plan. Contributions are made with after-tax dollars, and will not interfere with means-tested government benefits like Medicaid and Supplemental Security Income. Their maximum size vary by state. Read more here.

They are generally exempt from federal taxation, “though nonqualified distributions are subject to an additional tax on earnings,” Matt Stagner, a special-needs financial consultant, recently wrote for MarketWatch. ”The accounts also typically have low to no startup costs.”

But this should be secondary to a special-needs trust, which will also allow you to accumulate assets that do not affect government benefits. They can include your house, stocks, gifts and life-insurance policies. They come with their own rules, and limitations. 

“If drafted appropriately, it can ensure that she continues receiving federal and/or state benefits while also having a nest egg to fall back on,” says Deana Crawford Arnett, a certified financial planner with the Rosenthal Wealth Management Group.

You may be the trustee while your daughter is still living, Arnett says, and a contingent or backup trustee would take over for you upon your passing. “It can be a relative, friend, or professional trustee, depending on your situation,” she adds.

“The trust can pay for almost anything a parent would provide, i.e., medical equipment, medical costs not covered by insurance, education, training, entertainment, electronics like computers or tablets, legal expenses, insurance premiums,” Arnett says.

“As you may imagine, there are certain things a trust shouldn’t pay for, like food, lodging, utilities, property taxes, homeowner’s insurance, HOA or condo dues. These are all items you may discuss with an attorney as you’re crafting the trust document,” she adds.

Arnett has another piece of salient planning advice: Consider increasing your life-insurance policy to an amount that is sufficient to pay off the balance on your mortgage in the event that you pass before it’s fully paid off. 

“Life insurance would be subject to underwriting guidelines for height, weight, and other medical measures,” she says. “This would ideally be a private policy, not employer-provided coverage.  Most often, employer life insurance doesn’t continue after retirement.”

It’s easy to get distracted by day-to-day responsibilities and forget about tomorrow. It may surprise you that — according to this study from the University of Illinois — fewer than half of parents of children with intellectual and developmental disabilities make long-term plans.

The authors gave some reasons as to why they don’t plan. Sometimes, family members don’t want to think or talk about the future — a future when their children are on their own — or parents disagree about how to handle the future of their child with the disability. 

They cited the lack of residential, employment and recreational services that would have helped their children’s individual needs, but also said 75% of people with intellectual and developmental disabilities don’t have access to formal services.

I’m sure it has not always been easy being a single parent, but single parents are often among the unsung honorable heroes of this life. A child only needs one good parent for a happy, fulfilled existence. You are both very fortunate to have each other. 

You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected], and follow Quentin Fottrell on Twitter.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

• I live with my girlfriend, 59, who owns several homes and has saved $3 million. I pay utilities and cable, and do lots of repairs. Is that enough?
• ‘He is the most computer-illiterate person I know’: I was my husband’s research analyst, caregiver, cook and housekeeper. Now he wants a divorce after 38 years.
• ‘Our friends always yearned for a relationship like ours’: My husband of 16 years left me for another man. I don’t want them to live in our properties. What can I do?