Closing the gaps in special‑needs financial planning
Closing the gaps in special‑needs financial planning
BY ELEANOR BECKER - Citywire
BDO Wealth’s Desiree Raghubir and Crue Invest’s Sue Torr provide insights on how to plan for long‑term dignity and stability and move beyond technical solutions.
Despite advisers’ good intentions, many financial plans for special-needs families fall short.
These clients often serve as primary caregivers to children or other dependants with complex needs, many of whom will never be able to manage their own finances.
‘Most advisers still approach families with special-needs dependants using traditional financial planning frameworks that assume increasing independence over time,’ BDO Wealth associate director Desiree Raghubir told Citywire South Africa.
‘That approach falls short where a dependant is likely to require lifelong care and support.’
Plans often prioritise asset accumulation and investment returns without fully considering how those assets will support day‑to‑day living and long‑term care.
In an internal article, Crue Invest co-founder Sue Torr noted that diagnosis, severity, prognosis and life expectancy all affect the planning process. The time horizon often needs to extend beyond the client’s lifetime to include that of their special‑needs child, she added.
Raghubir said advisers also fail to engage sufficiently with ‘the human realities behind the numbers’. Families need clarity on who will assume care responsibilities, how decisions will be made and how consistency will be maintained once parents or guardians have died. These questions are often insufficiently explored during the planning process, she said.
As such, ‘planning for special‑needs families requires a shift in mindset,’ Raghubir said.
‘Advisers need to move beyond technical solutions and focus on building structures that support dignity, stability and sound decision‑making over the individual’s lifetime – and when parents are no longer there to advocate on their behalf.’
Budgeting for life-long care
Before developing a budget, Torr suggested creating an expense timeline unique to the dependant’s condition, plotting major anticipated costs such as treatments, medical equipment and hospitalisations in the short to medium term. This should then be incorporated into a monthly budget.
Costs such as special clothing or footwear, medical beds and bedding, home adaptations, prosthetics, wheelchairs, walking aids and dietary supplements can be substantial, said Torr. Investments must therefore be structured to meet short‑, medium‑ and long‑term care costs.
Building robust plans
Raghubir believes planning should start with a clear understanding of a dependant’s lifelong care needs, including medical, social and emotional considerations. This includes anticipated living arrangements, healthcare requirements, supervision needs and the level of independence realistically achievable.
Advisers should test the plan against a range of scenarios, including parents’ incapacity or death, changing care needs and rising long‑term costs. The plan must remain workable across these outcomes.
Where a parent must stop working to care for a child, preplanning is essential and alternative options, such as private carers or care facilities, should also be considered, Torr added.
Caring for a special‑needs child often means clients must plan for both their own retirement and their child’s long‑term financial security, Torr said. Multi‑generational planning is therefore critical.
‘Families need confidence that income and capital will last for the beneficiary’s lifetime, often across several decades,’ Raghubir added. This requires long‑term modelling, conservative assumptions and regular reviews.
Medical costs
Healthcare planning typically involves comprehensive medical scheme cover for chronic and day‑to‑day healthcare needs, Raghubir said.
Torr agreed, noting that benefits such as chronic condition cover, access to scans and scopes, cover for medical appliances and specialist reimbursement levels should be carefully assessed when selecting a plan. Network‑only plans may not be appropriate where a child has specific medical needs, she added.
However, even the most comprehensive medical aid won’t cover all costs, Torr warned. Gap cover is thus advisable for dependants requiring frequent hospitalisation, to cover shortfalls between specialists’ fees and medical aid payouts.
Insurance
Raghubir added that long‑term care planning may involve insurance solutions or earmarked funding within an investment strategy. ‘The focus should be on sustainability of cover rather than short‑term cost savings.’
Torr noted that parents of special‑needs children often require higher levels of life cover than other families, to account for medical costs, carers or care facilities, special schooling and ongoing equipment upgrades.
Regular reviews of both medical and life cover are essential to ensure arrangements remain aligned with evolving care needs, Raghubir added.
Trusts, tax and governance
Wills, trusts and guardianship structures form the foundation of continuity planning for special‑needs families, Raghubir said, helping to protect against uncertainty, poor financial management and unintended loss of benefits.
Trusts allow assets to be managed in a controlled, purpose‑driven manner on a beneficiary’s behalf. However, she cautioned that no single structure suits every family. ‘Arrangements should be tailored to each family’s care needs, resources and dynamics.’
That said, she sees testamentary special trusts as highly effective in many cases, as they enable thoughtful planning without administrative complexity during a parent’s lifetime, while providing clarity and governance after death.
Torr agreed, explaining that a Type A special trust is created under Section 6B(1) of the Income Tax Act for the sole benefit of a person incapable of managing their own affairs, based on medical diagnosis. Parents can establish an inter vivos trust during their lifetime or a testamentary trust on death, she said, adding that at least three trustees should be appointed.
Torr added that special trusts can own life policies on parents, with proceeds paid directly to the trust to provide for the child’s medical and living costs after death.
The tax and administrative costs of trusts can be high and must be modelled from the outset to ensure long‑term affordability, said Raghubir. However, special trusts benefit from favourable tax treatment, as they’re taxed at individual rather than standard trust rates.
‘Fees should be transparent and reasonable, and structures reviewed regularly to ensure they remain aligned with the family’s objectives,’ she said.
Ultimately, a trust’s success depends on how well it’s designed and managed, including clear rules around income and capital use and trustee powers. Selecting appropriate trustees is therefore critical, she added.
‘Beyond financial competence, trustees and guardians need emotional intelligence, long‑term commitment and a genuine connection to the beneficiary,’ Raghubir said.
She has found that combining family and professional trustees often produces the strongest outcomes, blending personal and technical insight.
Disability benefits and emergency planning
Raghubir noted that families with disabled dependants may qualify for valuable tax concessions, particularly around medical expenses, which should be incorporated into long‑term planning.
Some support is also available through a South African Social Security Agency‑administered disability grant. However, this is more supplementary income rather than a long‑term solution, she said.
Torr emphasised the importance of an accessible emergency fund to cover unexpected costs such as emergency treatment, hospital co‑payments, equipment repairs or travel. She recommends building up the equivalent of a year’s income.
Wills and letters of wishes
Estate planning should assume care responsibilities will eventually transfer – sometimesunexpectedly, Raghubir said. ‘This requires clear instructions, adequately funded structures, identified decision‑makers and scenario planning long before those plans are needed.’
Minor dependants require a nominated guardian if both parents die, Torr said. Guardianship should be discussed and accepted in advance, with an alternative guardian also appointed. A will can provide direction, with practical detail set out in a letter of wishes.
Torr noted that many parents include a detailed life‑care plan in their letter of wishes, outlining their child’s medical history, treatment plans, living arrangements, trust details and trustee instructions. It may also cover their wishes around religious instruction and values.
Ultimately, beyond the technical requirements, clients and their loved ones with special needs require comprehensive and compassionate planning.
BDO Wealth’s Desiree Raghubir and Crue Invest’s Sue Torr provide insights on how to plan for long‑term dignity and stability and move beyond technical solutions.
Despite advisers’ good intentions, many financial plans for special-needs families fall short.
These clients often serve as primary caregivers to children or other dependants with complex needs, many of whom will never be able to manage their own finances.
‘Most advisers still approach families with special-needs dependants using traditional financial planning frameworks that assume increasing independence over time,’ BDO Wealth associate director Desiree Raghubir told Citywire South Africa.
‘That approach falls short where a dependant is likely to require lifelong care and support.’
Plans often prioritise asset accumulation and investment returns without fully considering how those assets will support day‑to‑day living and long‑term care.
In an internal article, Crue Invest co-founder Sue Torr noted that diagnosis, severity, prognosis and life expectancy all affect the planning process. The time horizon often needs to extend beyond the client’s lifetime to include that of their special‑needs child, she added.
Raghubir said advisers also fail to engage sufficiently with ‘the human realities behind the numbers’. Families need clarity on who will assume care responsibilities, how decisions will be made and how consistency will be maintained once parents or guardians have died. These questions are often insufficiently explored during the planning process, she said.
As such, ‘planning for special‑needs families requires a shift in mindset,’ Raghubir said.
‘Advisers need to move beyond technical solutions and focus on building structures that support dignity, stability and sound decision‑making over the individual’s lifetime – and when parents are no longer there to advocate on their behalf.’
Budgeting for life-long care
Before developing a budget, Torr suggested creating an expense timeline unique to the dependant’s condition, plotting major anticipated costs such as treatments, medical equipment and hospitalisations in the short to medium term. This should then be incorporated into a monthly budget.
Costs such as special clothing or footwear, medical beds and bedding, home adaptations, prosthetics, wheelchairs, walking aids and dietary supplements can be substantial, said Torr. Investments must therefore be structured to meet short‑, medium‑ and long‑term care costs.
Building robust plans
Raghubir believes planning should start with a clear understanding of a dependant’s lifelong care needs, including medical, social and emotional considerations. This includes anticipated living arrangements, healthcare requirements, supervision needs and the level of independence realistically achievable.
Advisers should test the plan against a range of scenarios, including parents’ incapacity or death, changing care needs and rising long‑term costs. The plan must remain workable across these outcomes.
Where a parent must stop working to care for a child, preplanning is essential and alternative options, such as private carers or care facilities, should also be considered, Torr added.
Caring for a special‑needs child often means clients must plan for both their own retirement and their child’s long‑term financial security, Torr said. Multi‑generational planning is therefore critical.
‘Families need confidence that income and capital will last for the beneficiary’s lifetime, often across several decades,’ Raghubir added. This requires long‑term modelling, conservative assumptions and regular reviews.
Medical costs
Healthcare planning typically involves comprehensive medical scheme cover for chronic and day‑to‑day healthcare needs, Raghubir said.
Torr agreed, noting that benefits such as chronic condition cover, access to scans and scopes, cover for medical appliances and specialist reimbursement levels should be carefully assessed when selecting a plan. Network‑only plans may not be appropriate where a child has specific medical needs, she added.
However, even the most comprehensive medical aid won’t cover all costs, Torr warned. Gap cover is thus advisable for dependants requiring frequent hospitalisation, to cover shortfalls between specialists’ fees and medical aid payouts.
Insurance
Raghubir added that long‑term care planning may involve insurance solutions or earmarked funding within an investment strategy. ‘The focus should be on sustainability of cover rather than short‑term cost savings.’
Torr noted that parents of special‑needs children often require higher levels of life cover than other families, to account for medical costs, carers or care facilities, special schooling and ongoing equipment upgrades.
Regular reviews of both medical and life cover are essential to ensure arrangements remain aligned with evolving care needs, Raghubir added.
Trusts, tax and governance
Wills, trusts and guardianship structures form the foundation of continuity planning for special‑needs families, Raghubir said, helping to protect against uncertainty, poor financial management and unintended loss of benefits.
Trusts allow assets to be managed in a controlled, purpose‑driven manner on a beneficiary’s behalf. However, she cautioned that no single structure suits every family. ‘Arrangements should be tailored to each family’s care needs, resources and dynamics.’
That said, she sees testamentary special trusts as highly effective in many cases, as they enable thoughtful planning without administrative complexity during a parent’s lifetime, while providing clarity and governance after death.
Torr agreed, explaining that a Type A special trust is created under Section 6B(1) of the Income Tax Act for the sole benefit of a person incapable of managing their own affairs, based on medical diagnosis. Parents can establish an inter vivos trust during their lifetime or a testamentary trust on death, she said, adding that at least three trustees should be appointed.
Torr added that special trusts can own life policies on parents, with proceeds paid directly to the trust to provide for the child’s medical and living costs after death.
The tax and administrative costs of trusts can be high and must be modelled from the outset to ensure long‑term affordability, said Raghubir. However, special trusts benefit from favourable tax treatment, as they’re taxed at individual rather than standard trust rates.
‘Fees should be transparent and reasonable, and structures reviewed regularly to ensure they remain aligned with the family’s objectives,’ she said.
Ultimately, a trust’s success depends on how well it’s designed and managed, including clear rules around income and capital use and trustee powers. Selecting appropriate trustees is therefore critical, she added.
‘Beyond financial competence, trustees and guardians need emotional intelligence, long‑term commitment and a genuine connection to the beneficiary,’ Raghubir said.
She has found that combining family and professional trustees often produces the strongest outcomes, blending personal and technical insight.
Disability benefits and emergency planning
Raghubir noted that families with disabled dependants may qualify for valuable tax concessions, particularly around medical expenses, which should be incorporated into long‑term planning.
Some support is also available through a South African Social Security Agency‑administered disability grant. However, this is more supplementary income rather than a long‑term solution, she said.
Torr emphasised the importance of an accessible emergency fund to cover unexpected costs such as emergency treatment, hospital co‑payments, equipment repairs or travel. She recommends building up the equivalent of a year’s income.
Wills and letters of wishes
Estate planning should assume care responsibilities will eventually transfer – sometimesunexpectedly, Raghubir said. ‘This requires clear instructions, adequately funded structures, identified decision‑makers and scenario planning long before those plans are needed.’
Minor dependants require a nominated guardian if both parents die, Torr said. Guardianship should be discussed and accepted in advance, with an alternative guardian also appointed. A will can provide direction, with practical detail set out in a letter of wishes.
Torr noted that many parents include a detailed life‑care plan in their letter of wishes, outlining their child’s medical history, treatment plans, living arrangements, trust details and trustee instructions. It may also cover their wishes around religious instruction and values.
Ultimately, beyond the technical requirements, clients and their loved ones with special needs require comprehensive and compassionate planning.