“Thought for the Day” #795 – by Stephen R. Elville, J.D., LL.M.

September 1, 2016

There are several ways to handle child support for a child with special needs.  If the amount of the child’s SSI benefit is clear at the time of the divorce, it may be possible to agree upon a child support settlement that reduces, but does not eliminate, SSI.  Of course, the benefit of receiving SSI and Medicaid has to be weighed against the advantages of a larger child support payment.  In some cases, it may be better to forgo SSI and receive a larger child support award instead.  In other cases, it may make sense to create a special needs trust for the child’s benefit.  The court can then order the non-custodial parent to make support payments directly into the special needs trust.  The trust will shelter the income and allow the child to retain SSI benefits, and, in many cases, the support payments can be retained in the trust if not immediately used. Unfortunately, these particular special needs trusts are not perfect because they must contain a “payback provision” that allows the government to recover its Medicaid expenses from the unused assets in a deceased SSI beneficiary’s trust.  However, if properly managed, there may not be a large sum remaining in the special needs trust when the beneficiary passes away.