Why grandma’s holiday check could be the worst gift for a special needs child

(BPT) - You know that little check you can always count on from grandma or grandpa around the holidays? It could be the worst gift your child gets this year, if he or she is a child with special needs.

If a child with disabilities accumulates more than $2,000 in total assets - including money in a bank account, bonds, or CDs - the child and his family could lose thousands of dollars in government funding and services. These resources are crucial and help keep some families from going broke paying to care for and educate their children.

“The government has strict limits on how much money can be in the child’s name, and the limit is very low,” says Joanne Gruszkos, director of the SpecialCare program at Massachusetts Mutual Life Insurance Company (MassMutual). The SpecialCare program gives special needs families access to information, specialists, financial products and critical services.

“If a child with special needs has more than $2,000 in his name, the government could freeze benefits such as Medicaid, Medicare, Supplemental Security Income, or Social Security Disability Income,” says Gruszkos.

It doesn’t take a huge gift to push a child over the limit; as little as $10 could do it. If the child has $1,995 in his name, $10 puts them over the limit at $2,005.

“Families of children with special needs must be very careful about accepting gifts from well-meaning friends and family,” says Gruszkos. “Families have literally lost thousands of dollars in aid and services because they didn’t know how to plan.”

MassMutual shares these tips to help friends and families of children with special needs.

1. Do not give or accept financial gifts in the name of a child with special needs.

2. Deposit gifts into a special needs trust that benefits the child.

3. Without knowing it, interest could increase the value of your child’s account. Carefully monitor your child’s assets and make sure they do not quietly grow to exceed $2,000.

4. Volunteer to help care for a child with special needs, so the parents or guardians can have some time to themselves. Caring full-time for children with special needs can be very intense, expensive and demanding.

5. Create a letter of intent that spells out exactly how you want your child with special needs to observe the holidays and with whom, if you pass away - what type of gifts he or she should or should not be given, and what kind of life he or she wants to lead. A free letter of intent is available at www.massmutual.com/specialcare/resources.

Setting up a special needs trust is the first step in creating a life care plan for a child with special needs. This type of planning is crucial, yet highly complicated and difficult to do without help, because the issues are so complicated and the laws are so complex. The services of an attorney specializing in special needs planning are essential.

Special Care planners can provide additional information and help people assemble an integrated team of professionals experienced in the area of special needs.

For more information about MassMutual’s SpecialCare program, visit www.massmutual.com/specialcare/resources.