Helping a Special Needs Grandchild
in New Jersey with a Disability

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 13, 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 to 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 exist 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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