There's an elephant in the room with many special needs families and it's putting millions of young and adult children in a precarious state.

MetLife's 2005 survey, "The Torn Security Blanket: Children with Special Needs and the Planning Gap," found that 88% of parents who have children with special needs haven't set up a trust to preserve eligibility of government benefits, 84% haven't written a letter of intent outlining an agreement for the child's future care, 72% haven't named a trustee to handle the child's finances and 53% haven't identified a guardian for their child. 

"Most parents are focusing on day-to-day needs, and often, long-term planning goes by the wayside," says Michael Beloff, CFP, a financial advisor with MetLife's Barnum Financial Group in Shelton, Conn. About 32% of parents spend more than 40 hours a week caring for their special needs child-the equivalent to a second full-time job, according to the survey. Many parents also continue to have difficulty finding comprehensive guidance related to special needs planning.

Getting it right, though, for the 35 million Americans with severe disabilities (a U.S. Census Bureau statistic) is getting more important in the face of rising health care costs, shrinking state budgets that are cutting benefits and services, and longer life expectancies for individuals with many kinds of disabilities.

An estimated 730,000 Americans age 21 or younger have an Autism Spectrum Disorder, according to a 2009 report funded by the Centers for Disease Control and Prevention (CDC) and the U.S. Department of Health and Human Services. Average life expectancy for individuals with Down syndrome, who are prone to early onset Alzheimer's disease, is now 56 years with many reaching their 60s and 70s, says the National Association for Down Syndrome.

Beloff's journey into special needs planning began nearly a decade ago as he started researching what he needed to do to protect his now 12-year-old autistic son. The financial advisor, who formerly practiced law, realized how little special needs financial planning information was out there and channeled his growing expertise into a niche practice. He joined Barnum in 2009 partly because of its corporate commitment to this market. MetLife's National Center for Special Needs Planning currently has approximately 200 specially trained Special Needs Planners affiliated with it.

MetLife's Web site has a special needs calculator that can give parents a preliminary look at how much money they'll need to save for their child's care and quality of life. Looking ahead with clients at what their children's capabilities and needs may be in the future is a key component of the planning process, says Beloff. He's also assisted them in getting a better handle on current medical expenses.

One of his clients, a business owner, was paying over $60,000 a year for non-covered Applied Behavioral Analysis (ABA) therapy for an autistic child. The client had too much income to deduct it as a medical expense and was ineligible for a Flexible Savings Account. Beloff discovered the client could fund a supplemental health insurance plan and deduct the premiums as a business expense-resulting in a $25,000 a year savings.

A big mistake more affluent parents may inadvertently make is disqualifying their special needs children from government benefits by providing them with assets and income that exceed eligibility limits. To qualify for Supplemental Security Income (SSI) and Medicaid, disabled children age 18 and up cannot have more than $2,000 in assets (cars and homes are exempt).

Even if parents don't need SSI and Medicaid for their children, they should consider making them eligible so they can participate in government-funded training programs, housing arrangements and transportation that could foster independence and self-esteem, says Minoti Rajput, CFP, founder and principal advisor of Secure Planning Strategies in Southfield, Mich.