Live Mint : Leaving no child behind : Oct 8,2007

Live Mint : Leaving no child behind : Oct 8,2007

Leaving no child behind

When a child is born with, or develops, a progressive physically- or mentally-challenging condition, the despair and helplessness parents suffer should ideally be replaced by sound financial planning to secure the future of the new-born

Taru Bahl

It is a medical condition where a virus attacks the mother during pregnancy but the brunt of the infection is borne by the foetus. What makes the congenital rubella (German measles) syndrome particularly frightening is that it can adversely impact ones hearing, speech and even sight, besides impairing mobility. Once congenital rubella sets in, it is irreversible and could, in extreme circumstances, condemn the afflicted to a life in bed.

Raghav Jaidka, or Raju as he is fondly called, is a 20-year-old resident of Chandigarh who has practically all the symptoms of this dreaded medical condition. Raju stoically withstood attempts at adapting to a range of special aidsbut without much success. His parents Manju, a professor of English at Punjab University, and Vickram, an engineer, accepted the situation and coped with the emotional challenge.

They also have come to terms with the possibility that Raju may outlive them and that there will come a stage in life where they will not be around to look after his physical or financial needs.

The Jaidkas realized the magnitude of their responsibility when the extent of Rajus disability became obvious. Long-term planning seemed imperative. Planning is done even for normal kids who have to go to school and whose higher education and training needs are to be met, Manju says. So, it was just like saving for another child. Only in this case, one knows that the child will always need money and there will be no returns.

Being in a salaried job with two young girls and Raju meant that saving was a luxury and a necessary evil, something that had to be done for a rainy day, says Manjuand it was safe conservative saving instruments such as Life Insurance Corp. of India (LIC) policies, fixed deposits, Public Provident Fund (PPF) and some National Savings Certificates (NSCs) which were natural choices, over other riskier options such as stocks or mutual funds, which were dependent on markets. All of the Jaidkas savings have their daughters as beneficiaries. While we may not have a specific target in terms of creating a corpus fund for him, we have put a fixed amount in a fixed deposit and the rest we keep saving on a floating basis, as and when there is money that can be put aside, says Manju.

When Raju was still an infant, they opened a PPF account in his name that was Rs3 lakh on maturity at the age of 18. Being confined to bed, without vision, hearing, speech or mobility, Raju was unable to sign or give his mother power of attorney. This proved to be a problem area because the bank was reluctant to hand over the cheque for the matured sum to the Jaidkas. The issue was resolved after several attempts and the money then was put in a fixed deposit in Rajus name, under the natural guardianship of his parents. When Raju was still an infant, they opened a PPF account in his name that was Rs3 lakh on maturity at the age of 18. Being confined to bed, without vision, hearing, speech or mobility, Raju was unable to sign or give his mother power of attorney. This proved to be a problem area because the bank was reluctant to hand over the cheque for the matured sum to the Jaidkas. The issue was resolved after several attempts and the money then was put in a fixed deposit in Rajus name, under the natural guardianship of his parents. According to Subhash Lakhotia, a New Delhi-based tax consultant, the possibility of nominees turning hostile and uncooperative is not uncommon. Which is why he insists that having just two people in a trust is not a good idea. There should be at least three or more dependable trustees who, in the event of any member turning self-serving, can be vetoed by a majority. He suggests having a person from the maternal side of the family as a trustee too, since the person would be completely above board.

transformed her life, much like a fairytale. Katyal, 22, spends most of her productive time baking beauties that literally sell like hot cakes. She is proud of her achievement because she fought her medical condition to find a niche in society.

In fact, Dr Shelly and Dr Aseem Katyal, who live in Gurgaon, had never anticipated that a home craft such as baking would one day become their childs lifeline. The small, home-run enterprise, which started a couple of years ago, promises to secure Eshas financial future, while she has the option of operating out of the comfort and security of a familiar environment, under the watchful eye of family.

Esha was diagnosed with borderline intellect when she was only two and a half years old. Through her growing-up years, her parents painstakingly tried to build her self-esteem and give her positive reinforcement and financial independence. She was trained through special schools and private counsellors and teachers. The Katyals were fortunate to find Shri Ram School in Gurgaon running an 18-month teachers assistant programme in their Special Needs Department. Through a tie up, Esha later secured a placement with St. Marys School, located in Vasant Kunj in New Delhi, where she worked as a volunteer. After two years, when the school had to accommodate a fresh class of interns, Shellys renewed effort landed Esha at a lesser-known but sensitized set-up within Colonel Satsangis Kiran Memorial School, located in Chattarpur, also in New Delhi, where she is part of the institutions s earn n learn programme.

So, during the first half of the day, Esha is an assistant teachermarking attendance, handing out notebooks, supervising lunch time and proctoring class, and during the second half, she is a student in special school. Last year, Esha wrote her Class X exams and scored 58% marks in home science. The tailored curriculum of New Delhi-based National Institute of Open Schooling allowed her to choose subjects of her choice, which could be cleared at her pace. Esha has now taken up courses in English and word processing, in addition to enrolling for an advanced course in bakery from a non-profit organization, Akshay Pratishthan, located in Vasant Kunj. Her routine is chock-a-block. Happy with being busy, like her parents and brother Aneesh, who is studying to be a dentist, Esha is logical enough to put a poser to her mother, Dont you think my baking pays me more than my assistantship and I should just bake, bake and bake some more? The Katyals have planned and ensured Eshas financial security through medium- and long-term investments, such as insurance policies with LIC and private insurance companies. They keep putting aside regular sums of money in government bonds. Esha also is a beneficiary in many of their savings. They did not consider setting up a trust to manage her funds because they had reassurance from their son, Aneesh, that he would stand by Esha. I have found at least one out of 10 families that have a member who is physically, mentally or emotionally impaired, says Lakhotia. More parents are today are setting up trusts, drawing up letters of intent, making wills, and naming trustees and guardians who can handle the persons finances. Health care and medical technology is improving and many such people will outlive their parents. This is why sound planning must be woven into the parenting process.

A little savvy financial planning today for a gifted child or someone with disability can not only make you look at the future with confidence, it would also ensure that no child is left behind.

Exemptions under IT Act

The exemption available under the Income-tax Act for the disabled is available u/s 80-U: Conditions for deduction: individual; resident in India; person with disabilityany person suffering from disability not less than 40% of any disability as under: blindness; low vision; leprosy-cured; hearing impaired; locomotor disability; mental retardation; and mental illness

The taxpayer has to furnish a copy of the certificate issued by the medical authority. The medical authority for this purpose refers to any hospital or institution specified by notification by the appropriate government agencies for the purpose of the persons with disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995

The deduction available under this section is fixed at Rs50,000. A higher deduction of Rs 75,000 is allowed for a person with severe disability (over 80%)

Section 80-DD: If the taxpayer incurs any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, who is disabled, or has paid or deposited funds under any Life Insurance Corp. of India (LIC) policy or any other insurer or the administrator or a specific company, the assessee gets a deduction of Rs50,000 for both the options ,as mentioned above, and a higher deduction of Rs 75,000 with the person having a severe disability of more than 80%.

Courtesy: Vinod Rawal (CA)

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