Helping a Grandchild with a Disability
by
Valerie A. Powers Smith,
Esq.
Hinkle, Fingles & Prior, Attorneys at Law
2651 Main Street
Lawrenceville, New Jersey 08648
(609) 896-4200 or (215) 860-2100
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 a long-term plan for the grandchild's care that will have long-lasting positive effects
on an entire family.
Good planning by the whole family can alleviate unease arising from such costs or concerns as medical expenses
or therapy not covered by insurance or government programs. While reducing worries about the child's future and
the lifelong responsibility for the child's supervision, a grandparent's assistance can also diminish any emotional
impact on other grandchildren in the family.
Monetary gifts to a grandchild with disabilities can create problems if not properly managed. Normally at age 18,
a person with a significant disability becomes eligible both for a monthly cash benefit-or Supplemental Security Income
(SSI)-as well as Medicaid health insurance and funding for adult services. However, any resources or investments in excess
of $2,000 render the grandchild ineligible for benefits covering the costs of sought-after supervised living arrangements
and adult day programs.
In an actual case, J. qualified for Medicaid at age thirteen, and in the five years until he qualified for SSI at
age 18, he consumed over $1 million in 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 potentially 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 secure by making modest monetary gifts directly to the parents, and any larger
ones to a grandchild's singular Special Needs Trust (SNT) of future gifts and bequests that, when properly drafted,
will not be counted as a resource terminating eligibility for SSI and Medicaid.
In addition to having the ability hold real estate where the grandchild may eventually live, an SNT can purchase
services not attainable through government or private programs, or therapy and healthcare, education and training,
vacations, and recreation to protect and enhance the grandchild's lifestyle. Funds can also reimburse family members
for expenses incurred while monitoring the grandchild's health.
As an alternative, when paid out, the benefits of a life insurance policy, purchased for one or both parents, and
held by the SNT, will alleviate the burden of setting aside assets for the child with a disability while even saving
estate taxes in some cases. The best choice here would be a joint survivorship life insurance policy on the lives of
both parents as it costs less and will prove more useful over time.
Does a will leave an inheritance to a grandchild with a disability? If so, it should name the grandchild, indicate
whether a part of the estate will be bequeathed, and state that the gift be transferred to the grandchild's SNT. Should
the grandparents' own children predecease them, determine if the grandchild would be the beneficiary of these, or any
retirement and 529 accounts, or life insurance. 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.
Giving to the organizations serving people with disabilities generates goodwill while providing a tax deduction.
Dependent on government funding and charitable contributions, these non-profits, along with your grandchild would
immediately benefit.
Within a wide range of circumstances in each family exists many good choices for providing long-term care and support
to a grandchild with a disability. The involvement of grandparents can make a difference in the family's overall quality
of life as they collectively navigate the needs of the grandchild.
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Hinkle,
Fingles, & Prior maintains a multi-state law practice
with offices in Lawrenceville, Marlton, and Florham
Park, New Jersey, and Bala Cynwyd,
Pennsylvania. They lecture and write frequently on
topics of law, aging, disability and estate planning
and are available
to speak to groups in New Jersey
and Pennsylvania at no charge.
Comments
and suggestions for future articles should be mailed
to: Hinkle, Fingles & Prior, Attorneys at Law,
2651 Main Street, Suite A, Lawrenceville, New Jersey
08648-1012.
Copyright
2008 Herbert D. Hinkle. All rights reserved.
