When you and your spouse start talking about divorce, you should consider the effects of splitting up on your child with special needs. Divorce will require changes to your future planning, including – potentially – available benefits and your child’s special needs trust.
Child Support Payments and Divorce
Divorce lawyers drive hard bargains to get the best child support payments for their clients. Unfortunately, most divorce lawyers are not familiar with legal issues for children with special needs. They do not realize how child support payments can reduce or eliminate benefits for children that need them.
Child support payments are referred to as “unearned income” for Social Security benefits purposes. In general, SSI payments get reduced by the amount of unearned income a child with special needs receives. If your child is a minor, then one-third of the child support payments are excluded from “unearned income”. If your child is an adult, then no portion of the payments is excluded.
What you need to remember is that the bigger the child support payments, the greater chance your child will lose eligibility for government benefits. Instead, you can take advantage of a 1st party special needs trust (SNT).
Special Needs Trusts and Divorce
First, if you already have an SNT for your child for future inheritances or gifts, this type of trust is the wrong type of trust for child support payments to be made to. Instead, look into setting up a 1st party SNT now. The child support can be contributed directly to the trust, and then the trust can make distributions to pay for some of your child’s needs.
Further, the court order you receive that directs payment of child support must specify that payments are to be made to the trust. The court order also may need to require establishing the trust in the first place. Alternatively, and if the divorce is amicable, you could set up a third-party SNT. You and your ex-spouse could agree that one of you will make voluntary payments to the trust for the future benefit of your child with special needs. In this scenario, you do run the risk that your ex-spouse will stop making payments, since there is no court order requiring them.
Further, life insurance can be required to be maintained indefinitely to be paid to a 3rd party SNT when the parents pass on. This can provide important peace of mind to a parent that both them and their spouse will have significant assets left to the 3rd party SNT when they are gone.
Rubin Law is the only law firm in Illinois exclusively limited to providing compassionate special needs legal and future planning to guide our fellow Illinois families of children and adults with intellectual disabilities, developmental disabilities, or mental illness down the road to peace of mind. For more information, email us at firstname.lastname@example.org or call 866-TO-RUBIN.