Special Needs Planning During a Divorce

As much as all married couples hope it doesn’t happen, divorce is a reality for many.  According to the American Journal of Sociology, Arkansas ranked second in the United States among states with the highest divorce rates last year,  while nearly 20% of children in Arkansas, age 0-17, have special needs.  The issues that arise during a divorce are often complicated, yet special needs planning during a divorce tend to make these issues even more difficult.  The expertise of experienced special needs planning attorneys is a must.

Lifetime Child Support Payments

One major difference in divorce proceedings where a special needs child is involved, is the fact that child support awards may not end when that child becomes an adult.  The dispute regarding child support may not be over, either.  It is not uncommon for the non-custodial parent to seek a modification of the child support award once the child has reached the age of majority.  This is true with special needs children as well, and the parent may argue that, because the child is no longer a minor, he or she can now qualify for Supplemental Security Income benefits.  Another issue is that the child is likely receiving Medicaid benefits, which require a monthly “spend down” of income.  Obtaining or maintaining these government benefits often leads parents to consider whether a special needs trust is necessary.

Understanding the “Deeming Rules” in Qualifying for SSI Benefits

During a divorce, it may become a concern that the so-called “deeming rules” will make the child ineligible for SSI benefits. Pursuant to these rules, the parents’ income and assets are “deemed” to be available to the child for the purpose of determining eligibility for SSI benefits.  However, once the child turns 18, the deeming rule is no longer applied.  This means that, if the child begins to receive a monthly SSI benefit, her income will increase, which may affect her eligibility for Medicaid.  These issues are often the basis for a non-custodial parent to seek a downward modification of child support payments.

The need for a (d)(4)(A) Trust

If the special needs child’s income, including child support and SSI payments, exceeds the minimum for Medicaid eligibility in his or her state, then it must be shown that the child’s medical expenses exceed the amount she receives each month.  This is the only way Medicaid will pay the remaining medical expenses incurred each month.

In this situation, a non-custodial parent will often ask that the court create a self-settled special needs trust, pursuant to 42 USC § 1396p(d)(4)(A), which provides that the child support payments be irrevocably assigned to the trust.  This would eliminate the excess income and avoid the spend down issues.  This is yet another way to support a request for a downward modification of a child support award.

These are but a few examples of the complex issues that may arise during a divorce when a special needs child is involved.  If you have questions regarding special needs planning, or any other estate planning needs, please contact Wilcox Attorneys, PA online or by calling us at (479) 443-0062.