Grandparents are a gift to their grandchildren. They offer wisdom, comfort and a unique perspective gained over a lifetime of experience. 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 reduce unease arising from costs or concerns as medical expenses, equipment or therapies not covered by insurance or government programs.
While reducing worries about the child’s future and the lifelong responsibility for the child’s support, supervision and care, a grandparent’s assistance can also diminish the emotional impact on other grandchildren in the family. Monetary gifts to a grandchild with disabilities can create problems if not properly done. 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 makes the grandchild ineligible for public benefits covering the costs of many supervised living arrangements, adult day programs and benefits.
In an actual case, J. qualified for Medicaid at age 13, and in the five years until he qualified for SSI at age 18, he incurred over $1 million in medical 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 more secure by making modest monetary gifts directly to the parents, and any larger ones to a grandchild’s singular Special Needs Trust (SNT) for future gifts that when properly drafted, will not be counted as a resource terminating eligibility for SSI and Medicaid. In addition to having the ability to own real estate where the grandchild may eventually live, an SNT can purchase services not available 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, the proceeds of a life insurance policy purchased by one or both parents and held by the SNT will provide funds and assets for the child with a disability while saving estate taxes in some cases if set up correctly. The best choice here would be a joint survivorship life insurance policy on the lives of both parents as it costs less.
Does a grandparent’s will leave an inheritance to a grandchild with a disability? If so, change it today! 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.
Sometimes a grandparent will give to charitable organizations serving people with disabilities. These gifts generate goodwill and provide an immediate income tax deduction. Dependent on government funding and charitable contributions, these non-profits, along with your grandchild, will immediately benefit. Within a wide range of circumstances in each family, many good choices for providing long-term care and support to a grandchild with a disability exist. 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.
If you’re a grandparent and are reading this site, then call my office today. Ask for me to personally discuss your grandchildrens’ Special Needs Trust situation. Call me toll-free at (855) 376-5291 or e-mail me at fniemann@hnlawfirm.com.