By: Cary B. Stamp CFP®, CDFA™

Between 40 to 50 percent of marriages end in divorce. Indeed a disturbing figure. However, throw in the stress of raising a child with “special needs” and that number shoots up to 85 to 90 percent! And it is estimated that up to 31 percent of children under age18 have two or more special needs.

Children are often the most affected parties in any divorce. And when there is a child with physical, mental or emotional disabilities, the potential for long-lasting problems increases exponentially.

Therefore, divorcing couples who have special needs children, must take additional factors into consideration including …

Budgeting for the Child’s Care

Support guidelines generally do not include the higher costs the custodial parent may have when raising a child with special needs. Obviously there will be additional medical costs. But there could also be extra expenses, such as:

• Therapy
• Equipment
• Transportation
• Modifications to the home
• Day care

What’s more, most of these types of expenses are not covered by private insurance or government programs.  And the child’s requirements could easy change as he or she ages.

Making Both Parents Aware of the Child’s Special Needs

It’s highly possible that one parent had assumed most of the responsibility for caring for the child on a day-to-day basis. Examples of those tasks could include: Administering medication, coordinating doctors’ visits and processing insurance claims. Therefore, that parent should put together a detailed packet of documents so all parties can have a full grasp on what to expect. Such documents could include:

• Two years of explanation of benefits (EOB) from insurance companies
• Pediatrician’s records
• Doctors’ visits for the past year
• Medications and when administered
• Child’s allergies and diet requirements
• Child’s daily routine

Handling Assets

Divorcing parents need to consider if the child will be able to earn a living and handle his or her financial affairs after the parents die. Most likely, the answer is no. This presents a potential problem that could prevent a disabled child from receiving government assistance if he or she inherits assets …

In Florida, in order for special needs children to receive government help, such as Medicaid, they generally cannot own more than $2,000 worth of assets.  If they do, their government benefits stop until they have spent all but $2,000.  Then it takes months to resume the government assistance.  In addition, government payments do not provide even the federal poverty level of income for a disabled person, let alone money for the little things that make life enjoyable.

A “Special Needs Trust” can allow disabled children to keep government health and disability payments while benefiting from trust assets. These funds could then be used for things like vacations, a specially-fitted van, and other life-enhancing activities and goods.

The disabled child cannot set up the trust or be a trustee. A parent (s) can be a trustee, and there must be a co-trustee, generally a bank or other fiduciary third party.  When the parents die, the assets pass to the trust, not directly to the child.  The money is then handled by the third party trustee and used to pay for goods and services for the child’s benefit.

How I Can Help

Part of my role as a Certified Divorce Financial Analyst™ and CERTIFIED FINANCIAL PLANNER™ Practitioner in Palm Beach County Florida, is to work closely with attorneys and other professionals to help evaluate the budget needs of the child, identify what government programs might be available and review the parents’ assets. Then I put together a comprehensive plan to help the child be as financially protected as possible.