Magazine article The Exceptional Parent

Divorce and Your Child with Special Needs

Magazine article The Exceptional Parent

Divorce and Your Child with Special Needs

Article excerpt

The divorce rate in the United States, although it has dropped slightly in recent years, is still exceedingly high. A marriage today has a 50 percent chance of ending in divorce. Divorcing parents of a child with special needs face additional challenges. This article will address some of the most common concerns that are presented when parents of a child with disabilities divorce and what can be done to protect a special needs child in the event of a divorce.

This article will discuss the law generally and will not be specific to any one state. Divorce law, for the most part, is a matter of state law, which will vary somewhat from state to state. Many of the concepts are similar. Public benefits law is primarily federal but with some variations in implementation by each state.

Special Needs Trusts. Special Needs Trusts are designed to hold assets for a beneficiary receiving public benefits, particularly needs-based benefits such as Supplemental Security Income (SSI) and Medicaid, so that the trust assets can be used to enhance the beneficiary's quality of life while maintaining eligibility for the benefits. Such trusts are also referred to as "Supplement Needs Trusts," as the stated purpose of the trust is to supplement and not take the place of the public benefit programs.

A Special Needs Trust created by someone other than the beneficiary/special needs child is referred to as a "Third Party" Special Needs Trust. This is the type of trust that would be created as part of the parent's estate plan, for instance. Another type of Special Needs Trust is referred to as a "Self-Settled" or "d4A" or "d4C" trust. These trusts are permitted under Federal Law and are created by or on behalf of the individual with special needs using that person's own funds or property. The trust must be created and funded prior to the beneficiary's 65th birthday and requires that the state Medicaid agency be reimbursed for Medicaid benefits paid on behalf of the beneficiary out of any funds left in the trust at the beneficiary's death. If a gift or inheritance is paid directly to a beneficiary with special needs rather than into a "Third-Party" Special Needs Trust, the only way to maintain government benefits eligibility may be the use of a "Self-Settled" Special Needs Trust requiring Medicaid pay-back later on.

Revising Your Estate Plan. One of the first priorities of a divorcing parent of a child with special needs is to revise his or her estate plan and estate planning documents, deleting the soon-to-be-former spouse from his or her will or revocable trust, power of attorney, or beneficiary designations. The goal is to ensure that all of the assets intended to benefit the children do not inadvertently pass to the former spouse.

The will or revocable trust should transfer the property earmarked for a child with disabilities to a Special Needs Trust created for the child. Beneficiary designations should also be changed to name the Special Needs Trust as the beneficiar, to prevent any life insurance or retirement benefits from passing outright to the child with disabilities. The Special Needs Trust should be a separate trust in existence upon signing, naming the child as the trust beneficiary.

Family members, such as grandparents or other relatives, who feel inclined to make gifts to the child with a disability, or to include the child in their estate plans, should be encouraged to make the Special Needs Trust itself the recipient of such gifts rather than the child with special needs.

Child Support. Most states have guidelines that calculate child support based upon the parents' income. Both parents' wages and other income are the major factors in determining the amount of child support.

A typical child support order requires the payment of a set weekly amount to the custodial parent. Most states do not include as part of the child support calculation payments from a Special Needs Trust created for a child with disabilities. …

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