Special Needs Benefits

January 14, 2020

Working on a divorce in which a spouse or child has a disability can be tricky. If the disabled individual is receiving public benefits it is important to structure the divorce such that these benefits are not disqualified.

From the onset of divorce negotiations, it is important to be clear on what federal or state benefits are being received, and the income or asset qualification limits of each. This affects the discussions around alimony, child support and property division.

As soon as we learn that a family member has a disability, we reach out immediately to a specialist. (as Clint Eastwood’s character Dirty Harry said, “A man has got to know his limitations.”) Often, the family has already retained a special needs attorney who has helped them in the past to navigate the myriad array of available benefits. But if they have not, then we would look to a local attorney who specializes in this area. Knowing one’s own limitations is critical (and humbling): public benefits are complicated and there are specialists out there who are well-versed and experienced in how to accomplish a divorce without jeopardizing the benefits.

Public benefits include (but are not limited to):

Medicaid: there are 3 types of Medicaid including nursing home, home-based or aged, blind and disabled (ABD) programs. Each has income limits and includes income from any source – including alimony and child support. In addition, there are asset limits which are quite low.

Supplemental Security Income (SSI) is another form of public benefit, available to older adults (age 65 and up) or disabled individuals with limited income and resources. As with Medicaid, alimony and child support will count as income.

Social Security Disability Income (SSDI) is one public benefit that is not affected by divorce. This benefit is for disabled individuals with a work history. They qualify based on their work history, and there is no income or resource test.

Many times, families will set up special needs trusts to preserve eligibility for Medicaid or SSI, or other state programs. These trusts allow funds to be used directly for the needs of the beneficiary. They cover expenses not paid for through the public programs. There are several types of special needs trusts and a qualified attorney will help establish the appropriate type. These trusts can be used to hold alimony, child support or property in a way that preserves program eligibility.

Understanding what assets and income can be received by the disabled individual is critical and needs to be clarified early in the divorce negotiation process so discussions don’t go down the wrong path and waste time and money.

« Go back to Divorce Newsletters