THE LONG TERM FINANCIAL IMPLICATIONS OF A DIVORCE WITH A SPECIAL NEEDS CHILD

A special-needs child, especially one with severe physical or mental restrictions, will most often require lifelong care. That’s why parents who special-needs children need to think long-term when divorcing and make sure they can provide a secure financial future for their children. In this case, special care must be given to the sharing of financial responsibilities, estate planning and the child’s transition to adulthood.

Child Support
The California court system uses specific guidelines to decide on the amount of monthly child support one parent has to pay to the other. When a special-needs child has foreseeable, recurring expenses, such as the cost of medications and therapies, and educational costs, it is reasonable for the custodial parent to request additional child support to cover these expenses. Parents will want to look into setting up a Special Interest Fund (see Estate Planning below) so payments don’t affect the child’s ability to qualify for government benefits. California law doesn’t require child support for a special-needs child to continue past the majority age. That’s why it’s essential to put in writing who will be financially responsible for the child then, especially if the child can’t be financially or medically independent .

Spousal Support
Managing the care of a child with special needs is often a full- time job and the effect on the custodial parent’s income should be considered when establishing spousal support amounts. Since caring for a special-needs child can interfere with the custodial parent’s ability to maintain full-time work, the caregiver’s employment and earning potential are often affected. Spouses need to understand the sacrifices made by the parent who provides most of the care when determining spousal support, keeping the best interest of the child in mind. These child support and spousal support payments may need to extend well into the child’s adulthood, so it’s important to spell things out clearly in the marital settlement agreement (MSA).

Estate Planning
A special-needs child may already qualify for and receive much-needed government benefits but this money is usually not enough to take care of all the child’s physical, medical and mental needs. It is important for divorcing parents to understand that monthly child support payments are often considered income when it comes to determining government benefit eligibility, which could make a child ineligible for benefits after the divorce, while they were eligible during the marriage. Establishing a supplemental special-needs trust fund (SNT) with the child named as the beneficiary will help avoid this situation. The parent receiving the child support is named the fund’s trustee. Parents should also use this trust when choosing beneficiaries for their pension plans and retirement accounts, rather than their child’s name. Finally parents can create a supplemental benefits fund with the child as the beneficiary for any monies given to the child by the family as part of an inheritance, life insurance payouts, etc. Again this will avoid the child’s federal benefits being cancelled for exceeding the financial limits. Because these financial arrangements are complicated to set up, it is crucial to discuss these matters with an estate planning attorney and/or a financial planner who has experience helping special-needs families.

Post-Majority Care / Guardianship
Divorce gives parents the opportunity to discuss and decide who will be the guardian once their child turns 18, if he/she is unable to make financial or medical decisions for himself/herself. Parents should also name a guardian for their child in their individual wills, in case they pass away before the child turns 18. For peace of mind, parents should always hope for the best but prepare for the worst, to make sure their child is taken care of, in the short run as well as the long run.

If you have a child with special needs and are considering a divorce through mediation, it is important to choose a mediator with a strong understanding and knowledge of special-needs families, as well as an experienced financial adviser, to eliminate the risk of forfeiting your child’s benefits and to ensure a sound financial future. If everything is clearly spelled out in the marital settlement agreement (MSA), it will be easier to answer questions from the federal government about the financial situation of the child.