Divorces and child support issues can be complicated and stressful. Aside from the personal conflict and strife associated with these issues, the laws governing this area of practice are complex. Unfortunately, family law attorneys, and even judges, may not know how their area of law interplays with public benefits and affects people with disabilities. If you or your child has special needs and your family faces these issues, here is some basic information to keep in mind.
Those of us familiar with public benefits know receiving income, financial support, or settlements may reduce your public benefits award or, worse, make you ineligible. In divorce, a court may order spousal support, child support, or a transfer of assets in a way that jeopardizes public benefits. With some special needs planning, however, this support can be allocated in a way that does not cause a negative impact.
Spousal support might be deemed as income to a disabled spouse and affect public benefits such as SSI, Medicaid, SNAP, and supportive housing. Even in the case of a typical spouse receiving spousal support, SSI and other types of benefits to a disabled child may be reduced if the support is deemed as income to the child from the parent. Other assets awarded in a divorce settlement may be considered resources for the purposes of SSI or Medicaid.
Child support for a disabled child poses unique challenges and opportunities. In the state of Ohio, a court can order a parent to pay child support to a disabled child for the rest of the child’s life if he is unable to support himself. There is disagreement amongst Ohio courts about whether or not it makes any difference if the child support was ordered before or after the disabled child’s eighteenth birthday. In some counties in Ohio, courts may be unable to order child support through adulthood if the divorce or child support proceedings were commenced after the child was eighteen or older. While the disabled child is under the age of eighteen, one-third of child support will be disregarded for SSI purposes, but the remainder will be deemed income to the child and reduce his benefits. Once the disabled child is eighteen or older, child support will reduce his SSI award dollar for dollar.
Spousal support, child support, and other assets from a divorce proceeding can be placed into a special needs trust to avoid many of these complications. The court can order the establishment of a first party special needs trust and order payments be deposited there. The court could also order the funds be placed into a nonprofit pooled trust for the benefit of the disabled spouse or child. Third party trusts may only contain assets that the beneficiary is not legally entitled to. If the support or assets are ordered by the court, the spouse or child is legally entitled to them. If they are not ordered by the court or are voluntary agreed upon, however, it may be possible to place them into a third party trust. Third party trusts are preferable because, unlike first party trusts or pooled trusts, there is no need to worry about leftover funds in the trust being paid back to Medicaid down the road.
There are a number of other special needs considerations and strategies that may apply to these situations. Trusts may not always be the appropriate solution. It may be possible to limit the divorce settlement to assets that could be considered exempt resources, such as a home or car. Exempt resources are not counted when determining Medicaid eligibility. If support is offered in a way that cannot be used for food or shelter, such as the payment of a phone bill or money for recreational activities, it may not be determined to be income. If the nature of a spouse’s disability is such that they have a short life expectancy, it may be best to leave all of the marital assets to the typically abled spouse. Trusts can sometimes even be obstacles – some judges will consider lowering the support award if there is a prior existing special needs trust.
Because of the intricacies of special needs law, it is important to put your family law attorney in touch with your special needs attorney when these issues arise. Even if you are already receiving spousal support or child support that is reducing your benefits, it may still be possible to modify the court order or use a trust to remedy these problems.