Securing Your Child’s Future: Special Needs Planning in the Philippines

“The needs and concerns of the present oftentimes overshadow the necessity to plan for the future of children with special needs.”

– Ernesto C. Perez II, CTEP^®, Real Estate & Estate Planning Attorney

By Realttorney^®

No one lives forever. We are not the Eternals. But, for a parent of a child with autism (or a child with special needs), this fact engenders much anxiety, worry, concern, and apprehension on what the future will bring when we are no longer alive to provide for and care for our differently-abled children.

But, from the viewpoint of the disability being a lifetime condition, parents of children with special needs must recognize that they need to plan way ahead, regardless of financial status in life. Yet, the needs and concerns of the present oftentimes overshadow the necessity to plan for the future of children with special needs.

This is the reality all Filipino parents of children with special needs face because of the numerous financial challenges they face daily. In the Philippines, parents of children with special needs have far more challenges compared with other parents.

Sen. Sonny Angara, in his article entitled, Caring for Children with Disabilities said that raising a child with disabilities in the Philippines would entail expenditures 40 to 80 percent higher compared to raising a child without disabilities. This is due in large part to the additional costs for health expenditures considering the special needs of the disabled child. On top of this is the cost of education which could very well be higher than what is required from families with children without disabilities.

Apart from the medical and therapy expenses, and educational costs, these are some other common financial challenges of families raising children with special needs: (1) assisted care and support services; (2) income reduction or loss of employment; (3) legal and administrative expenses; and (4) limited financial assistance from the government.

Don’t get me wrong. The benefits provided by Rep. Act No. 10754 (An Act Expanding the Benefits and Privileges of Persons with Disability) are a big help to families living with a child with special needs.

Children with Special Needs (CSN) are exempted from 12% VAT on goods and services such as medicines, medical and dental services, professional fees, and educational supplies. CSNs are also entitled to a minimum of 20% discount on the regular retail price of basic necessities and prime commodities, including food, medicines, and essential household items. However, not all establishments comply with the provisions of the law and its Implement Rules and Regulations (IRR).

Then we have Rep. Act No. 11650 (Instituting a Policy of Inclusion and Services for Learners with Disabilities in Support of Inclusive Education Act) that hopes to provide learners with disabilities the additional resources to support their holistic education needs that include, among others, inclusive learning resource centers featuring multidisciplinary teams of professionals, accessible materials, child find systems, public awareness raising, consultative mechanisms, family education, pre- and in-service professional development for teachers and child development workers, and an advisory council.

Such loft goals indeed. However, in a recent article by the Philippine Information Agency, it said that according to the 2022 Country Report on Human Rights Practices in the Philippines by the United States Department of State, the law was not effectively enforced and that many barriers remain, including architectural barriers that made attendance difficult for persons with disabilities. Stakeholders and advocates have also lamented the non-issuance of the law’s IRR after more than a year since it was passed. The law was signed last March 11, 2022, by then-President Duterte.

While government sorts out the budget of the policies crafted in existing laws designed to benefit the education of children with special needs (or disabilities), Filipino parents cannot wait. We know that it is essential for us to protect our children’s future and ensure their educational and financial well-being.

While making sure that we can provide for the basic needs of our CSN today, Filipino parents should now look ahead and plan for the future of their family and how their CSNs will be cared for and provided for, when they (the child’s primary caregivers and financial provider) pass away. Would you delay this very important activity?

Filipino parents cannot leave such eventualities to chance by being unprepared. The life of the CSN and his/her siblings relies on your Special Needs Planning today. In these uncertain economic times, it becomes even more crucial to take proactive steps to ensure the financial well-being of your CSNs after the parents die.

This article will provide a comprehensive step-by-step guide to inspire and assist Filipino parents prepare a Special Needs Financial and Estate Plan. We hope that parents will be equipped with the adequate knowledge and tools necessary to navigate the process effectively.

Step One. Assessing Financial Needs and Resources.

Filipino parents – regardless of financial status – must conduct a thorough assessment of their child’s current and projected financial requirements, considering education, therapies, medical expenses, and quality of life.

It is crucial for parents to determine the potential impact of future economic uncertainties on the CSNs’ financial needs and factor in contingencies for unexpected situations. So, how does one perform the assessment of the family’s current financial condition or situation and the resources available to the family?

Initially, make an inventory of all the families’ property – personal and real – or assets. Thereafter, make a quick conservative valuation of all properties or assets. In addition, identify other valuable resources, including government benefits, insurance policies, and intellectual properties.

Working with a registered financial planner or a certified public accountant is not mandatory here. But parents must be able to make certain computations to annualize monthly income from active and passive sources, if any. If a bit challenged, get as much information as possible through various modalities of learning on the internet like YouTube.

Next, don’t forget to list down also the families’ current liabilities. Parents must be able to determine the net worth of the family, which must be reviewed often – annually or semi-annually. Net worth is simply total assets minus total liabilities.

After this, make a monthly income and expense statement. This is crucial because it gives a written or concrete document that the parents can review often. And the review process – either monthly or quarterly – assists parents in keeping the financial health of the family top-of-mind.

Step Two. Assemble Your Support Team.

The extended family structure is a hallmark of the Philippine society. Filipino families may average seven to nine members in size living in one household. Of course, such structure brings with it added financial challenges, but these can be turned into a positive. Hence, we must take advantage of the extended family structure.

Having said this, for Filipino parents, please be reminded that your parents (the grandparents of the CSN) are not your emergency fund. And your children (the income-earning siblings of the CSN) are not the source of special needs funds for the future. Let your other children build their own wealth and not be burdened by poorly planned eventualities in the future by the parents.

So have a candid conversation with your parents and other children (of legal age) regarding the care and quality of life of the CSN if death or incapacity happens to you. And as such, plans should be drawn out and prepared.

It is also important to seek guidance from professionals specializing in special needs financial planning, such as financial advisors, estate planning attorneys, and CPAs, familiar with the Philippine legal and financial systems. This is important if the estate is large, and the family dynamics complicated. There is no such thing as a DIY Special Needs Estate Plan.

Finally, collaborate with local support organizations and advocacy groups to access valuable insights and resources tailored to the Philippine context. The connections and network within the local special needs community will give ample insights based on shared experiences, knowledge, and resources of other families similarly situated. For our family, we support and get in touch with the Autism Society of the Philippines.

By building a support network, you can find solidarity, guidance, and potential collaborations to navigate the challenges and opportunities of special needs financial and estate planning in the Philippine context. You will know that you and your spouse are not alone in your journey of providing the best care and quality of life to your CSNs.

Step Three. Understand Government Benefits and Support Programs.

First, parents should familiarize themselves with the government benefits and support programs available for persons with disabilities in the Philippines, such as the Persons with Disabilities (PWD) ID, and educational assistance. We discussed the pertinent laws in the early part of this article above.

Second, if you are a single parent (or a solo parent, as it is popularly known in the Philippines) and raising your child with special needs, then you may what to check out Rep. Act No. 8972 (Solo Parent’s Welfare Act) and its IRR to determine if the provisions of the law are applicable to your current situation.

Kindly learn about eligibility criteria, application processes, and potential impact on other benefits and services as it applies to your family’s current situation. This law was enacted to support solo parents in mind. But, having and caring for a CSN does not disqualify a solo parent from the coverage of Rep. Act No 8972.

Step Four. Plan for Guardianship and Decision-Making.

When your CSN has real property in his or her name, from a donation or inheritance, then Filipino parents should consider the need for legal guardianship to protect your child’s rights and ensure decision-making continuity.

Is this really necessary? The answer is YES. That is why Filipino parents must learn and understand the Philippine legal framework for guardianship. Unfortunately, this necessity entails costs that are too much for Filipino parents with a not-so-large estate.

When the disability of your child is a lifetime condition, the appointment of a legal guardian is critical knowing that we, as parents, may not outlive our children with special needs. There must be a structure already in place for this eventuality.

Hence, consult with an estate planning attorney experienced in special needs planning to navigate the guardianship process effectively.

Step Five. Develop a Comprehensive Financial Plan.

Apart from our own estate and financial plan, Filipino parents must collaborate with a financial advisor experienced in special needs planning to design a comprehensive financial plan tailored to their child’s specific needs and circumstances.

Does your child need constant care from a nurse or a healthcare provider? Is he or she immobile or bedridden? Is he or she non-verbal and therefore cannot express his or her needs well? What are the chances that your child will marry in the future?

The answers to these questions will determine the type of investment options to consider, tax strategies to follow, and potential avenues for generating additional income to support your CSN’s financial future.

Step Six. Establish a Special Needs Trust (SNT).

If able, Filipino parents must explore the benefits of establishing a Special Needs Trust pursuant to local regulations and legal requirements established by law. The type of trust chosen should tailor to the specific needs and circumstances of the CSN and the entire family.

Of course, with this decision, parents should understand how to set up an SNT and what the concomitant costs related to establishing the said trust. As such, the parent must seek advice from an experienced estate planning attorney specializing in special needs planning.

Step Seven. Maximizing Tax Benefits.

No estate plan is worth its weight in gold if it does not optimize the tax strategies and ensure compliance with relevant tax laws and regulations. Therefore, we encourage Filipino parents to learn and understand the tax implications of special needs planning in the Philippines and explore available tax benefits and incentives.

Collaborate with a CPA and an experienced estate planning attorney to determine the best tax strategies available for your family’s current situation and needs. Ask them about tax deductions, tax credits, and tax-advantaged savings options applicable in the current investment climate and regulatory environment.

Step Eight. Prepare the Estate Planning Documents.

At this point in the planning process, your estate planning attorney should be drafting the essential documents that will form your entire estate plan. A comprehensive estate plan that includes a pour-over will, trust, powers of attorney, and healthcare directives.

Part of your estate planning documents is a detailed letter of intent to provide guidance to future caregivers regarding your child’s care, preference, and routines, consistent with the local cultural, social, and religious context.

Step Nine. Regularly Review and Update Your Plan.

It should be emphasized that Special Needs Planning is part and parcel of your overall estate plan. This plan is greatly integrated and critical to the rest of your estate plan that covers the needs of your other children. It is not and should never be separate from the planner’s estate plan.

But there may be instances when the Special Needs Trust can cause problems with the parent’s estate plan because it ties up funds that may be needed until the surviving spouse passes away. So, creating a separate SNT makes funds available immediately upon the death of a parent may be the right solution for your family’s situation.

As such, regularly review and update your estate plan to reflect changes in personal circumstances, Philippine laws, and your child’s evolving needs and situation. Also, you must be keen on the financial challenges and opportunities presented by economic uncertainties in the Philippines in the coming years.

Thereafter, assess the need for short-term contingency plans while keeping long-term financial goals in sight for your family, children, and most especially your child with special needs. This shows that the estate plan process does not end when a set of documents have been drafted, signed, and notarized. The process is a dynamic process – one that needs reviewing and revising when circumstance change or arise in the future that changes the assumptions when the first plan was set in motion.

How regularly should you review and adjust your estate and financial plan? Annually may be the best bet. But if there are major changes in the Philippine economy and/or your personal circumstances then you should update immediately.

In conclusion, as a parent of a child with autism in the Philippines, engaging in special needs financial and estate planning is paramount. Why? Because it ensures my child’s future security and well-being. In these times of economic uncertainties, it is essential to navigate challenges and seize opportunities to protect your child’s financial stability.

In the Philippines, special needs planning is about empowering children with unique abilities to reach their fullest potential apart from securing a financial legacy to ensure a future where inclusion and opportunity thrive. We do this because we love them and want the best for them.

By following this step-by-step guide, Filipino parents can proactively prepare a Special Needs Financial and Estate Plan to secure their children’s future. Remember, by assessing your financial needs and resources, assembling your support team, understanding government benefits, planning for guardianship, developing a comprehensive financial plan, establishing a Special Needs Trust, maximizing tax benefits, and preparing necessary estate planning documents, Filipino parents can navigate the complexities of special needs planning with confidence.

As a final note, balancing present needs with future planning is a crucial aspect of the estate planning process. Knowing that this process is a dynamic process that continues until the passing of the planner, collaborating with estate planning professional, registered financial planners, certified public accounts, insurance agents, and other professionals is key.

Think about it now. Knowing that you may pass away and leave your child with special needs without your company, what are you doing now to prepare your child for that eventuality?

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Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEP^®) professional who is committed to educating Filipinos about the value and importance of having an estate plan in their lives. He is also a parent of a child with autism.