The Intersection of Family Law and Special Needs Planning

I have spent most of my practice in a firm that focused on a single practice area, serving as an advisor to families in the areas of estates and trusts, and even more focused on special needs issues associated with chronic illnesses or disabilities. Joining a multi-faceted firm that is well-known for its family law practice, a big question I have had to answer in the last month is how my practice integrates into the existing practice. What many people do not realize is that elder law attorneys integrate into other practice areas because of our extensive knowledge related to public benefits, retirement benefits, taxes, and estates.

So, how does elder law integrate with family law?

Estate Planning

In nearly all divorces, estate planning documents will need to be updated. Most married couples have appointed their spouses as their primary agents, and in most cases, they will want these agents to be updated in light of the severed union. Most documents, and the law, will automatically result in spouses being removed as a fiduciary upon divorce, and even more important, will be removed from the line of inheritance upon death. Depending upon the relationship, and the of the divorce decree, these documents may need to be updated after divorce to continue fiduciary relationships or inheritance rights.

When there is a child with a disability, special needs trusts must be developed to protect assets set aside for the child without disrupting critical public benefits, specifically Medicaid benefits. These trusts may need to be updated to reflect benefits provided under the terms of any agreements, and to change fiduciary relationships.

Child Support

In Virginia, the law provides that parents have an obligation to support their dependent children. As a result, Virginia Code § 16.1-278.15 provides a court order that support be paid or continue to be paid for any child over the age of 18 who is severely and permanently mentally or physically disabled, and such disability existed prior to the child reaching the age of 18 or the age of 19, the child is unable to live independently and support himself, and resides in the home of the parent seeking or receiving child support. Upon request of either party, the court may also order that support payments be made to a special needs trust or an ABLE savings trust account.

While the legislature intended well, the implications of using an ABLE savings trust account in lieu of a special needs trust are detrimental when a child is receiving means-tested benefits. Specifically, because and ABLE savings trust account is held in the name of the child, the assignment of support to such an account does not eliminate support from an income calculation, thereby reducing any Supplemental Security Income benefits, and, depending on total income to the child, causing potential issues with Medicaid benefits. As a result, by court order, support is best directed to a special needs trust, thereby eliminating impact on many essential benefits.

Spousal Support and Division of Assets

In some cases, a party to a divorce may have a disability that requires significant financial and medical care. Income from spousal support or allocation of assets may disrupt benefits necessary to provide the medical care or other supports necessary after a divorce. As a result, a plan should be made prior to negotiations to determine what will best protect the spouse post-divorce.

An elder law attorney not only helps advise on the appropriate tools to allocate income and assets which an individual with a disability is entitled, but further helps establish them. In sum, we help develop a holistic plan that will protect a person with special needs. Call today to discuss a plan that fits your needs.