By: Jordan Niefeld, CPA, CFP®
When a couple decides to formally end their marriage, many times, there are children involved. It is safe to say that the most ideal situation is when both parents, together, cooperate for the benefit and what is in the best interest of their children. This couldn’t be truer for parents of a special needs child. Often times the best time to start planning for a child with special needs is at the beginning, in an open and collaborative process, of the divorce.
First, let’s start with how the Collaborative Process may be a good option for your family to consider with special needs children.
The Collaborative Process enables divorcing couples, as well as couples in other family law disputes, to reach agreements and resolve differences in a respectful and productive way; without “fighting it out” in court. The Collaborative Process involves a team of specially trained professionals including attorneys, mental health professionals and financial professionals who work together with couples to help find solutions in the best interests of the entire family, particularly the children.
When handling the delicate care and comfort of a divorcing couple’s special needs child, it is the responsibility of the parents, attorneys, therapists and financial professionals to make every effort to reach amicable solutions promoting the children’s best interests. This couldn’t be more important when a special needs child is involved.
Caring for a family member or friend with a disability or special needs can be worrisome, costly and difficult to navigate without expert help and a comprehensive financial plan. Fortunately, through the Collaborative Process, all parties convene together to help guide the family to achieve their ultimate short and long-term objectives.
One of the benefits of having a Certified Financial Planner™ financial professional on the team is to help financially plan and construct best practice solutions to ensure the special needs child is best prepared for their future. For example, whether due to an accident or mental disability, a special needs trust can help you better manage caring for a child in a way that enriches his or her life while not jeopardizing benefits that can be a significant source of income and health insurance.
Families with a special needs child may want to consider the benefits of a special needs trust. A special needs trust, sometimes called a supplemental needs trust, is a legal arrangement and fiduciary relationship which means one person or entity – the trustee – is charged with protecting the interest and assets for the benefit of another – the beneficiary*. The trust essentially allows an individual with a disability or special needs to benefit from the income and principal of the trust without reducing their eligibility for government assistance such as Supplemental Security Income (SSI) or Medicaid. Basically, any assets held in the trust do not count for the purposes of qualifying for government assistance. However, the trustee must ensure that trust distributions are within the guidelines of the particular government benefits the beneficiary is receiving. Otherwise, the distribution could have a negative impact on the benefit. For example, a beneficiary receiving SSI should not receive trust distributions for food or shelter-related expenses.
Given the complexity and longevity of administering a special needs trust and some of the overall financial planning strategies which a divorcing family may want to consider for their special needs child, it’s important to consider the best-qualified person or a corporate trust company to serve as trustee. Properly managing a comprehensive financial plan on behalf of the separating adults and special needs children means understanding the disabilities of the loved one and being able to effectively communicate with a parent, caregiver or guardian. Ultimately, it is a conversation which should be considered at time of divorce; and no better time when all parties are gathering together at the Collaborative Process table.
*Source: Raymond James Trust Division – Special Needs Trusts
Jordan Niefeld is a CPA & Certified Financial Planner® at Raymond James & Associates. Jordan and his team have helped individuals, families, divorcees, and businesses, locally and nationally, pursue their financial goals with thoughtful, tax-sensitive investment guidance and holistic financial goal planning. Jordan is a Board member at Kesher, a fully accredited school serving 1st through 12th grade students providing special education in both self-contained classrooms and mainstream integration for both secular and Judaic studies.