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 a long-lasting and positive effect on the entire family.
Advance planning can help reduce the stress and anxiety created by medical expenses, medical equipment, or therapies not covered by insurance or government programs.
Normally, at age 18, a person with a disability becomes eligible both for a monthly cash benefit – Supplemental Security Income (SSI) – as well as Medicaid. After completing their educational benefits through age 21, the person with a disability may be eligible for day programs, supported employment, or a residential placement from the Division of Developmental Disabilities (“DDD”). However, any resource(s) or investment(s) in excess of $2,000 makes the grandchild ineligible for public benefits covering the costs of many supervised living arrangements, adult day programs, and other life-enriching benefits.
Special Needs Trusts and Grandchildren
Here’s a Real-Life Case Example of Being Ineligible for Public Benefits Because of Excess Resources
In an actual case, a youngster qualified for Medicaid at age 13. In the five years between age 13 until he qualified for SSI at age 18, he received over one million dollars in government benefits. His application for SSI prompted a routine computerized search of his Social Security number. The search revealed $15,000 in savings bonds purchased by their grandfather. Although the bonds were unknown to his parents, the young adult was ineligible for Medicaid, and his parents were potentially liable to repay the one million dollars in benefits to the state. The case was resolved favorably, but not without considerable trauma to the family.
A grandchild’s future is made more secure by making gifts and financial contributions to a 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 for transportation, pay tuition for summer camp, therapies, education and training, vacations, and recreation to enhance the child’s life. Funds in an SNT can also reimburse family members for the expenses incurred while supporting the disabled child.
The proceeds of a life insurance policy purchased by one or both parents and owned by an SNT (or payable to the SNT) can provide funds for the child with a disability while reducing estate taxes in some cases if set up correctly.
Be Sure That a Grandparent’s Will Does Not Leave an Inheritance to a Grandchild with a Disability
If so, change it today! Also, a Last Will or lifetime gift of a savings plan for education, 529 accounts, and related educational gifts should be placed into a qualifying SNT.
Sometimes a grandparent will make a gift to a charitable organization serving the needs of people with disabilities. These gifts will allow for an income tax deduction for the beneficiaries. These non-profits, along with your grandchild, will immediately benefit from this generous gift. Many good choices for providing for the long-term care and support of 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 future of their beloved grandchild.
Fredrick P. Niemann Esq.
If you’re a grandparent and are reading this page, call my office today. Ask for me personally to discuss the benefits of your grandchildren’s Special Needs Trust. I’m available toll-free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com. I welcome your inquiries.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey Special Needs Trust Attorney