Helping a Grandchild with a Disability in New Jersey
Grandparents are a gift to their grandchildren. They offer wisdom, comfort and a unique perspective gained over a lifetime of experience. A grandparent’s support is invaluable to a family caring for a child with a disability. As the financial and legal issues facing the family change over time, grandparents can bolster the family’s long-term plan for the grandchild’s care in ways that will have long-lasting positive effects on an entire family. Good planning by the whole family can reduce unease arising from costs or concerns as medical expenses, equipment or therapies not covered by insurance or government programs.
While reducing worries about the child’s future and the lifelong responsibility for the child’s support, supervision and care, a grandparent’s assistance can also diminish the emotional impact on other grandchildren in the family. Monetary gifts to a grandchild with disabilities can create problems if not properly directed to a special needs trust. Normally, at age 18 a person with a disability may become eligible both for a monthly cash benefit – or Supplemental Security Income (SSI) – as well as Medicaid. After completing their educational entitlement at age 21, the person with the disability may be entitled to a day program, supported employment, or a residential placement from the Division of Developmental Disabilities (“DDD”). However, any resources or investments in excess of $2,000 makes the grandchild ineligible for public benefits covering the costs of many supervised living arrangements, adult day programs and benefits.
Special Needs Trusts and Grandchildren
In an actual case, J. qualified for Medicaid at age 13, and in the five years until he qualified for SSI at age 18, he received over $1 million in government benefits. His application for SSI prompted a routine computerized search of his Social Security number and revealed $15,000 in savings bonds purchased by J.’s grandfather. Although the bonds were unknown to his parents, J. was ineligible for Medicaid, and his parents were potentially liable to repay the $1 million. The case was resolved favorably, but not without considerable trauma.
A grandchild’s future is made more secure by making gifts to a grandchild’s singular Special Needs Trust (SNT) that when properly drafted, will not be counted as a resource resulting in loss of eligibility for SSI and Medicaid. In addition to having the ability to own real estate where the grandchild may eventually live, an SNT can purchase a car to transport the person with the disability and pay for camp therapies, education and training, vacations, and recreation to protect and enhance the grandchild’s life. Funds can also reimburse family members for expenses incurred while supporting the person with the disability.
The proceeds of a life insurance policy purchased by one or both parents and held by the SNT (or payable to the SNT) will provide funds and assets for the child with a disability while reducing estate taxes in some cases if set up correctly.
Does a grandparent’s will leave an inheritance to a grandchild with a disability? If so, change it today! Also, wills bequeathing savings plans for education, 529 accounts, and related educational gifts do not benefit the grandchild the most, and alternatives should be found.
Sometimes a grandparent will make a gift to a charitable organization serving people with disabilities. These gifts generate goodwill and may provide an income tax deduction. Dependent on government funding and charitable contributions, these non-profits, along with your grandchild, will immediately benefit. Within a wide range of circumstances in each family, many good choices for providing long-term care and support to a grandchild with a disability exist. The involvement of grandparents can make a difference in the family’s overall quality of life as they collectively navigate the system.
If you’re a grandparent and are reading this site, then call my office today. Ask for me to personally discuss your grandchildrens’ Special Needs Trust situation. Call me toll-free at (855) 376-5291 or e-mail me at firstname.lastname@example.org.
I welcome your inquiries.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Special Needs Trust Attorney