Careful planning and consideration must go into divorce and custody agreements to protect a special needs child and maximize access to important services and supports funded by public disability benefits.- The needs of the child with disabilities requires the language of any agreement(s) signed by the parents or submitted to the court must contain some important issues to consider.
The general statistic for marriages ending in divorce is as high as 75 percent to 90 percent for couples with special needs children. When one or more of those children have disabilities, parental agreement is of critical importance.
Child Support for a Special Needs Minor or Adult
Child support is required; but if improperly structured, child support can cause a child with disabilities to be ineligible for Supplemental Security Income (SSI) and Medicaid benefits. The Social Security Administration considers child support “unearned income” and counts two-thirds of child support payments as income when determining eligibility for SSI and Medicaid. It is, therefore, recommended that the divorce agreement direct child support be paid into a special needs trust for the benefit of the child with disabilities. This trust is different from any special needs trust created as part of either of the parents’ estate plans. The trust is funded in a way that will preserve future benefits.
The Custody and Residency of the Child
Consideration must be given to how a child’s residence affects the services he or she may need. If, as a result of divorce, a child must move from one state to another, residential services and Medicaid eligibility will not continue. Parents will have to apply for services in a new state and will likely face waiting lists for services such as day programming and residential placement. Even a move from one school district to another can have disruptive effects on the child’s special education placement or respite care services.
Health Care Insurance
Maintaining health insurance coverage of a child with disabilities is critical. Thought should be given to including language in a divorce agreement that requires one or both parents to maintain primary or secondary coverage for the life of the child with disabilities.
Life Insurance and Disability Policies
In most divorce agreements, one or both parties are generally required to maintain life insurance for the child’s benefit. When improperly planned, this can cause future eligibility problems for SSI and Medicaid if the child with disabilities is listed as a beneficiary. To avoid this problem, insurance beneficiary designations must be structured for the child with his/her share paid to a special needs trust created as part of one or both of the parents’ estate plans.
Decision Making and Guardianship/Conservatorship
For children under the age of 18, custody and other agreements must describe how decisions will be made for the child with disabilities and who is authorized to make them. When a child reaches the age of majority, 18 in most states, he or she is legally empowered to make decisions on his or her own behalf, regardless of the severity of the disability. When warranted, however, parents should agree that the custodial parent may make application for guardianship and/or conservatorship before the child reaches the age of majority. They should discuss who will serve as guardian if neither parent is able to do so.
Estate Planning and Special Needs Trusts
Often, a family member plans to leave money to a child with a disability. Doing so, however, can have devastating consequences. It is, therefore, advisable that each party agree not to direct bequests under a Will or Trust or make any beneficiary designation to the child with disabilities; but, rather, to a special needs trust. Ideally this trust is created by one or both parents’ estate plans. Grandparents or other relatives could create special needs trusts but administering multiple trusts for a single person can be an administrative nightmare.
With careful planning and consideration, a divorce does not need to limit or disrupt services to a child with disabilities. Parents of a child with disabilities in a divorce situation are encouraged to share this information with their attorneys so that the interests of their child are protected in the process.
To discuss your NJ special needs trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Special Needs Trust Attorney