Child Support and Special Needs Children: The importance of a special needs trust when parents of special needs children are getting divorced or establishing a child support order.

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Individuals with special needs may be eligible for government assistance programs like SSI and Medicaid.  SSI is intended to provide financial assistance for food and shelter and Medicaid provides health insurance coverage. Child support payments impact eligibility for these programs and the establishment of a special needs trust when the child becomes an adult can be critical to maximizing child support payments and government benefits for the child.

When the child is a minor and receiving SSI:

When a minor is residing with a parent, his parent’s financial resources are taken into consideration when determining SSI and Medicaid eligibility.  For those minor children who qualify for SSI, child support is treated as unearned countable income for the child. Pursuant to current rules, one-third of the child support payment is excluded as countable income when calculated benefits under SSI. The remaining two-thirds is treated as countable income which will reduce the SSI benefit. For example, Mary is receiving $400 in child support each month. She is also receiving SSI for her child. SSI will exclude $133 of the child support payment and the remaining $267 will be subtracted from the SSI benefit rate. As the monthly maximum federal benefit rate for an eligible individual is $735 in 2017, in 2017, Mary’s child would receive $468 per month.

When the child is an adult and receiving SSI:

Once a child becomes an adult, his parents’ resources are no longer taken into account for eligibility. Hence, many more individuals with special needs will become eligible for Medicaid and SSI who were not eligible as minors.

If a child with special needs is unable to support himself after becoming an adult, parents continue to have a duty of support and the court can order that child support payments continue. However, after the child reaches adulthood, those child support payments can have a more devastating effect on eligibility for benefits.

For each dollar received in child support after an individual reaches adulthood, his benefits will be reduced dollar for dollar. Hence, continuing the example with Mary above, if Mary was receiving $400 in child support each month, SSI will deduct the SSI payment to Mary’s now adult child by $400. As the monthly maximum federal benefit rate for an eligible individual is $735 in 2017, in 2017, Mary’s child would receive $335 per month.

The Use of a Special Needs Trust:

After a child has become an adult, and is receiving SSI benefits each month, it is best to set up a special needs trust for the receipt of the payments, to avoid its detrimental effect on SSI payments.  When child support payments are irrevocably assigned to a special needs trust for the child’s benefit per court order, the payments will have no impact on the child’s benefits and will allow the child the full benefit of both SSI benefits and the child support payments.

Special needs trust planning and the rules governing Medicaid and SSI can be very complicated. Most family law attorneys are not well versed in the intersection of family law and special needs planning. Hence, it is important to engage an elder law or special needs attorney in any case involving special needs children and child support. Contact a Cleveland elder law lawyer or a Cleveland special needs lawyer for more information.