Divorce With a Special Needs Child

A child with special needs may be eligible to receive valuable government benefits to assist with his or her care. When the parents of a child with special needs divorce, it is critical that the parents ensure that the divorce process and any subsequent payments (like child support) do not disrupt the much-needed government benefits that the child receives.This is why you need to consult with an experienced NJ divorce lawyer.

Typically when parents divorce in NJ, one parent may be required to pay child support to the other parent for the costs of raising the child. In those cases one spouse will usually send a personal check made out to the other parent at regular intervals. In the case of a child with special needs, however, the payment of child support directly to the other parent can negatively effect the ability of the child to qualify for certain government benefits like Social Security and Medicaid. This is because while the support is paid to the parent, certain “means based” government programs consider child support to be a financial asset of the child.

The federal government’s Social Security Income (SSI) program may be affected by child support payments both before the child turns 18 and after. SSI is a “means based” program, meaning that certain income requirements must be met to receive the benefits of the program. Before a child is 18, if the child receives SSI and the non-custodial parent pays child support directly to the custodial parent, the SSI check will be reduced by one third. Once the child is 18 or older, the SSI check will be reduced dollar for dollar with the amount of child support received. As you can see, child support payments can greatly diminish the amount of government benefits a child with special needs will receive. Medicaid is similarly affected by child support payments.

A qualified special needs trust is a legal instrument that child support payments can be made to, rather than being paid directly to the custodial parent. Using a special needs trust avoids the problem of a child receiving reduced government benefits or being disqualified from receiving benefits due to the receipt of child support payments.

Federal regulations allow for the creation of this type of trust so long as it complies with the guidelines set forth in the statute, including a provision that requires that any money left in the trust when the person with special needs dies be paid back to Medicare. It is important to note that this type of special needs trust is different than another type of special needs trust that is often used for estate planning purposes. The type of trust discussed in this article is sometimes called an OBRA ’93 trust, a special needs payback trust, or a d4A (named after the relevant statute).

A qualified special needs trust needs to be created by an attorney with specialized knowledge of the complexities of this particular type of special needs trusts. If you need assistance, call the Law Offices of Peter Van Aulen at 201-845-7400 for a free initial consultation with an experienced NJ divorce lawyer.

42 U.S.C. §1396p(d)(4)(A)