Chances are that you didn’t marry your spouse with the idea of getting a divorce. Surveys have indicated that there are many different and varied reasons for divorce. Something or a multiple of events have caused you to think of divorce. Most people will agree that few challenges are more difficult than going through a divorce. This is typically because of disagreements concerning multiple factors such as:
- Dividing Property – what will happen to the family’s residence and who will assume the existing debts are among the issues.
- Alimony – sometimes known as spousal support. Do you each couple have equal income earning potential when other family or domestic responsibilities are considered?
- Child Custody and Parenting Time – where should your shared children live and how and when should the other parent be involved in your children’s lives. This often continues to be a point of contention and is used as a weapon against each other.
- Child Support – financial payments to provide basic child support, medical care and childcare expenses. The amount of childcare depends on your child’s needs and the potential of each parent to provide. Each state has laws that detail the calculation of child support. This is expected to terminate when your child reaches 18 or graduates from high school.
Before a typical divorce is finalized, these issues must be decided. You can negotiate together and reach agreement on your own, or a judge can decide the issues and order a resolution in the final divorce decree.
Additional Issues in a Special Needs Divorce
Having a child with special needs creates challenges for most families. You are concerned about your child’s day-to-day care, their independence and their healthcare to name a few. Let’s consider these and they may be affected by a divorce.
Day-to-Day Care
When a child’s education is managed correctly, those that receive special education services can continue in school past age 18 and until their 22nd birthday. The school bus will continue to come as it probably has for many years. Your child’s time in school allows the primary caregiver, often the mother, respite or the opportunity to be employed. What then happens after the 22nd birthday? The bus stops coming, your child is no longer welcome at school. Assuming you’re your child is not capable of working; will someone need to be at home providing care or supervision and who should that be? Does the custodial parent need to be at home all day providing this supervision? Is there someplace else for your child to go?
Special Needs Divorce Planning Pointer
Child support and/or alimony may need to continue past age 18. If the custodial spouse can’t continue or start to work, other resources must be provided to maintain the household. If the custodial spouse chooses to continue to work, additional funds might be needed to hire someone to provide daily care and supervision.
Government Benefits
Many of our special needs children may be eligible for government benefits such as SSI (Supplemental Security Income) and Medicaid. The SSI program provides monthly payments to adults and children who have low income and resources and who are blind or disabled. This program is provided through the Social Security Administration and is governed by the POMS or Program Operations Manual System. The POMS is the primary source of information used by Social Security employees to process claims for Social Security benefits.
According to the POMS, when your child is under 18, a concept called “deeming” is in effect. This means that your (parents’) income and resources are used in the qualification process for benefits. Many of our disabled children will not qualify because their parents receive too much income. This changes on the 18th birthday. Qualification for SSI and Medicaid is based on the individual’s own income and assets. If your child hasn’t previously received SSI and Medicaid through a waiver, they probably will qualify and begin to receiver the $841 per month SSI benefit.
NOTE: Medicaid is a program ran by the states and provides medical care and other benefits. The eligibility requirements are similar to SSI. For simplicity, assume the SSI and Medicaid eligibility to be the same.1
Special Needs Divorce Planning Pointer
$841 monthly is not very much when a special needs child is involved. It will hardly provide a secure, meaningful and comfortable lifestyle for anyone. Additional funds should be considered through child support payments. This is where we run into problems. Child support, according to POMS, is considered income to the child. So, if child support is paid to your child, he/she could be disqualified for the monthly payment of $841. Is there a way to receive child support without the SSI amount being decreased? According to POMS, if the child support is put into a special needs trust, the SSI amount will not be affected. POMS also stipulates that it must be a 1st Party Special Needs trust, a -d4A trust or a self-settled trust, all names for the same type of trust. This trust is unique in that it must contain a Medicaid payback provision.
Legal Rights
All individuals on their 18th birthday receive some very important legal rights. They each have the right to make their own decisions about:
- Determining residence or where they live
- Consenting to medical treatment and making their own medical decisions
- Managing, buying or selling property
- Borrowing money
- Going to school
What if your child due to their disability, for instance an intellectual disability, is not able to safely make these decisions independently? This is where guardianship enters. Guardianship is a legal process, utilized when a person can no longer make or communicate safe or sound decisions about his/her person and/or property. The court will determine whether the person can or cannot safely make these decisions and if not, will take away this right. This decision-making authority is given to someone else known as the guardian to make these decisions for them.
Special Needs Divorce Planning Pointer
Someone, often one or both parents, are designated as the individual’s guardian/s. In the case of a divorce, would it be advisable to have both parents be guardians? If both were guardians, both would need to agree on every decision. Would you want to discuss every minor decision with your ex-spouse and give them to opportunity to use this as a weapon? In most circumstances, the custodial parent would be best suited to be the guardian.
Life Insurance
In many divorces, life insurance on one or both parents is a stipulation of the divorce decree. This is to provide financially for the children of the divorce should premature death occur. Earlier we discussed the need for additional financial support for a child with special needs. This is a greater reason for life insurance and should extend through the remainder of the child’s lifetime. Two common ways to see that the death benefit proceeds go to the children is to list the children as the primary beneficiaries of the life insurance policy or to create a family trust that will receive the death benefit proceeds with the children as trust beneficiaries. Neither of these methods is typically suitable for a special needs child. Both can be devastating to a special needs child. Receiving $2,000 of a death benefit either directly or in a family trust will disqualify them from SSI and Medicaid.
Special Needs Divorce Planning Pointer
Life insurance is a very valuable asset to a special needs dependent. However, if the life insurance beneficiary designation is handled incorrectly, the death benefit can cause the child to lose valuable government benefits. A 3rd Party Special Needs Trust (SNT) can allow the beneficiary to receive the life insurance proceeds and remain eligible for their government benefits. A 3rd Party SNT can allow another beneficiary to receive the remainder of the trust when the special needs beneficiary dies. A 3rd Party SNT does not have the Medicaid pay-back provision necessary in a 1st Party SNT.
Your Special Needs Divorce Planning Team
Few events in your life will be as difficult and stressful as a divorce especially if a special needs child is involved. One helpful thing that you can do is to develop a team of professionals that can help you navigate these challenges. Your team might include:
- Experienced Family Law Attorney
- Financial Advisor with experience working with special needs families. Consider someone with the Chartered Special Needs Consultant (ChSNC) designation.
- Special Needs Attorney with experience with both 1st Party and 3rd Party Special Needs Trusts.
I have found that not all attorneys or financial advisors know everything. By creating a team with the suitable professionals, you can plan for the best possible outcomes for you, for your children especially your children with special needs.
1 Not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare and Medicaid Services, or any government agency.