Helping a Grandchild with a Disability in New Jersey
Grandparents are a gift to their grandchildren. They offer wisdom, comfort, and a unique perspective gained over a lifetime of experience. A grandparent’s support is invaluable to a family caring for a child with a disability. As the financial and legal issues facing the family change over time, grandparents can bolster the family’s long-term plan for the grandchild’s care in ways that will have a long-lasting and positive effect on the entire family.
Advance planning can help reduce the stress and anxiety created by medical and other expenses not covered by insurance or government programs.
Normally, at age 18, a person with a disability becomes eligible both for a monthly cash benefit known as Supplemental Security Income (SSI) – as well as Medicaid. After completing their educational benefits through age 21, the person with a disability may be eligible for day programs, supported employment, or a residential placement from the Division of Developmental Disabilities (“DDD”). However, any resource(s) or investment(s) in excess of $2,000 makes the grandchild ineligible for public benefits which cover support services, the costs of many supervised living arrangements, adult day programs, and other life-enriching benefits.
Special Needs Trusts and Grandchildren
Here’s a Real-Life Case Example of Being Ineligible for Public Benefits Because of Excess Resources
In an actual case, a youngster qualified for Medicaid at age 13. At age 18 he qualified for SSI. His application for SSI prompted a routine computerized search of his Social Security number. The search revealed $15,000 in a savings bond purchased by his deceased grandfather. Although the bonds were unknown to his parents, the young adult was ineligible for Medicaid, and his parents were potentially liable to repay nearly a million dollars in medical benefits to the state. The case was resolved favorably, but not without considerable trauma to the family.
A grandchild’s financial future can be secured by making gifts and financial contributions to a properly drafted Special Needs Trust (SNT). The funds placed in a SNT will not be counted as a resource resulting in loss of eligibility for SSI and Medicaid. In addition to having the ability to own real estate where a grandchild may eventually live, an SNT can purchase a car for transportation, pay tuition for summer camp, therapies, education and training, vacations, and recreation to enhance the child’s life. Funds in an SNT can also reimburse family members for the expenses incurred while supporting the disabled child.
The proceeds of a life insurance policy purchased by one or both grandparents or parents and placed into a SNT (or payable to the SNT) can provide funds for the child with a disability while reducing estate taxes in some cases if set up correctly.
Be Sure That a Grandparent’s Will Does Not Directly Leave an Inheritance to a Grandchild with a Disability
If a parent’s or grandparent’s last will or trust leaves an inheritance directly to a person with disabilities change it today! Also, a lifetime gift of a savings plan or savings/investment account, an education, a 529 account(s), and any other similar educational or financial gift should also be placed into a qualifying SNT.
Sometimes a grandparent will make a gift to a charitable organization serving the needs of people with disabilities. These gifts will allow for an income tax deduction to the grantor of the gift. These non-profits, along with your grandchild, will immediately benefit from this generous gift. Many good choices for providing long-term care and the support of a grandchild with a disability exist. The involvement of grandparents can make a difference in the family’s overall quality of life as they collectively navigate the future of their beloved grandchild.
Fredrick P. Niemann Esq.
If you’re a grandparent and are reading this page, call my office today. Ask for me personally to discuss the benefits of creating your grandchildren’s Special Needs Trust. I’m available toll-free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com. I welcome your inquiries.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Special Needs Trust Attorney