When a family has a child or loved one with special needs, planning for the future often involves more than traditional family law matters. Questions about financial support, government benefits, guardianship, and estate planning can become especially important as children approach adulthood or families experience major life changes such as divorce or remarriage.

On a recent episode of the Herlihy Family Law Podcast, attorney Walter Gewin of Herlihy Family Law welcomed Stephanie Booth, principal attorney at Gulf Coast Elder Law in Mobile, Alabama, to discuss how special needs planning intersects with family law. Booth focuses her practice on estate planning, special needs trusts, guardianships and conservatorships, Medicaid planning, and Social Security disability benefits.

Understanding these legal considerations can help families make informed decisions, protect important benefits, and create a more secure future for their loved ones.

 

Understanding Post-Minority Support for Adults with Disabilities

In Alabama, the age of majority is 19, and child support generally ends when a child reaches adulthood. However, when a child has a disability that prevents them from becoming financially independent, post-minority support may be available.

Post-minority support allows financial assistance to continue into adulthood when the legal requirements are met. This can be particularly important for families in which an adult child requires ongoing care, supervision, or financial assistance.

Parents should begin considering these issues well before their child turns 19. Important questions include:

• Where will the adult child live?
• Who will provide daily care and supervision?
• Will one parent need to reduce working hours or stop working to provide care?
• How will ongoing expenses be shared between parents?
• What financial resources and government benefits may be available?

For divorced or divorcing parents, these considerations can also affect decisions about financial support, caregiving responsibilities, and long-term planning.

 

How Child Support Can Affect Government Benefits

Government benefits can provide essential financial assistance and healthcare coverage for individuals with disabilities. However, the rules governing eligibility can be complicated, particularly when child support or post-minority support is involved.

Supplemental Security Income (SSI) is a federal program that provides financial assistance to eligible individuals with disabilities who have limited income and resources. In Alabama, SSI eligibility can also provide access to Medicaid.

An important distinction involves how Social Security evaluates income before and after a child turns 18.

Before age 18, parental income and resources may affect SSI eligibility. Generally, two-thirds of child support received for a minor child is excluded when determining countable child support income.

Once an individual turns 18, parental income and resources generally are no longer attributed to them under SSI’s parental deeming rules. However, child support payments received by an adult with disabilities may count as unearned income and affect eligibility.

This creates an important planning challenge. Financial support intended to help an adult child could potentially reduce or eliminate benefits that provide essential healthcare and other services.

Coordinating child support arrangements with public benefits planning is critical to protecting both sources of assistance.

 

Special Needs Trusts: Protecting Financial Security and Benefits

A special needs trust is an estate planning tool designed to hold and manage assets for a person with disabilities while helping preserve eligibility for certain means-tested government benefits.

These trusts can provide financial resources for expenses and services that improve a person’s quality of life without necessarily disqualifying them from programs such as SSI and Medicaid.

There are two primary types of special needs trusts that families should understand.

First-Party Special Needs Trusts

A first-party special needs trust is funded with assets belonging to the individual with disabilities.

These trusts may be particularly relevant when an adult with disabilities receives child support, a settlement, or an inheritance directly.

In certain circumstances, a properly structured trust can help preserve government benefits while allowing funds to be used for the individual’s needs.

However, first-party special needs trusts generally include a Medicaid payback requirement. This means that after the beneficiary’s death, remaining trust assets may be used to reimburse Medicaid for qualifying benefits paid during the individual’s lifetime.

When child support is involved, the trust arrangement and assignment of support payments must be addressed carefully during the legal proceedings. Waiting until after a divorce settlement or support order is finalized can make the process significantly more complicated.

Third-Party Special Needs Trusts

A third-party special needs trust is funded with assets belonging to someone other than the individual with disabilities, such as a parent or grandparent.

These trusts are commonly used in estate planning to provide financial support after a caregiver passes away.

Funding sources may include:

• Inheritances
• Life insurance proceeds
• Retirement account distributions
• Gifts from family members
• Other assets designated for the individual’s future care

A properly established third-party special needs trust can allow these assets to support a loved one without becoming a countable resource for certain government benefits.

Unlike many first-party trusts, a properly structured third-party special needs trust generally does not require Medicaid reimbursement after the beneficiary’s death. Remaining assets can instead pass to other designated beneficiaries.

For families who want to provide for a loved one with disabilities while preserving assets for other family members, this distinction can be especially valuable.

 

Why Estate Planning Is Essential for Families With Special Needs

One of the most significant estate planning mistakes families can make is leaving money or property directly to someone who receives means-tested government benefits.

Even a relatively modest inheritance could cause an individual to exceed SSI resource limits, potentially interrupting financial assistance and Medicaid eligibility.

Without advance planning, families may need to pursue additional legal proceedings, establish a trust after the fact, or make urgent arrangements to protect benefits.

These situations can create unnecessary expenses and uncertainty, especially when the individual depends on Medicaid-funded healthcare, residential services, or other assistance.

A comprehensive estate plan should address several important questions:

• Who will manage assets intended for the individual with disabilities?
• How will future caregiving and housing needs be funded?
• Should a special needs trust be established?
• Who should serve as trustee?
• Who should receive any remaining trust assets after the beneficiary’s death?
• Are life insurance and retirement account beneficiary designations consistent with the estate plan?

Planning ahead allows families to make these decisions thoughtfully rather than during a financial or medical crisis.

 

The Importance of Applying for Disability Benefits Early

Families should also understand the importance of documenting disabilities and exploring Social Security benefits before a child reaches adulthood.

One particularly important program is the Disabled Adult Child benefit, also known as Childhood Disability Benefits.

Under applicable Social Security rules, an eligible adult whose disability began before age 22 may qualify for benefits based on a parent’s Social Security earnings record when that parent retires, becomes disabled, or dies.

These benefits can provide an important source of long-term financial support. Medicare eligibility may also become available after the applicable qualifying period.

Families should maintain thorough documentation, including medical records, educational evaluations, disability assessments, and school records.

These records may help establish when a disability began and support future benefit applications.

Parents should also consider available evaluations while their children are still in school. Obtaining updated assessments later in adulthood can be more difficult and expensive.

Although a disability must generally have begun before age 22 for Disabled Adult Child benefits, an application does not necessarily have to be filed before that birthday. Preserving evidence of the disability’s onset is especially important.

 

Guardianship vs. Conservatorship: Understanding the Difference

As children with disabilities approach adulthood, parents may discover that their legal authority to make decisions changes.

In Alabama, individuals generally become legal adults at age 19. At that point, parents do not automatically retain authority to make healthcare, financial, or personal decisions on their child’s behalf.

When an adult cannot make certain decisions independently, families may need to consider guardianship, conservatorship, or other legal arrangements.

What Is Guardianship?

Guardianship involves court-appointed authority to make certain personal decisions for an individual who lacks the legal capacity to make those decisions independently.

Depending on the court order, a guardian’s responsibilities may include decisions about healthcare, living arrangements, personal care, and other daily needs.

The guardianship process generally involves a court petition, supporting medical information, and a determination of the individual’s needs.

What Is Conservatorship?

Conservatorship focuses primarily on managing an individual’s finances and property.

A conservator may be responsible for overseeing assets, paying expenses, managing financial accounts, and reporting to the court.

Conservatorships can involve ongoing accounting and reporting requirements. Additionally, assets held under a conservatorship may still count toward eligibility limits for means-tested benefits.

For this reason, families should carefully evaluate whether a conservatorship is necessary or whether another financial management arrangement would be more appropriate.

Are There Alternatives to Guardianship?

Not every adult with disabilities needs a full guardianship or conservatorship.

Depending on the individual’s ability to understand and make decisions, less restrictive options may be available, including powers of attorney, healthcare decision-making arrangements, and other legally recognized support mechanisms.

For example, an adult who understands the purpose of a power of attorney may be able to authorize a trusted family member to assist with financial or healthcare decisions.

For individuals receiving Social Security benefits, appointing a representative payee may also provide a way to manage those payments without requiring a conservatorship solely for that purpose.

The goal should be to provide appropriate protection while preserving as much independence and decision-making authority as possible.

 

ABLE Accounts as Another Financial Planning Option

ABLE accounts provide another tool for eligible individuals with disabilities and their families.

These tax-advantaged savings accounts allow funds to be set aside for qualified disability expenses while receiving special treatment under certain means-tested benefit programs.

Qualified expenses can include housing, transportation, education, healthcare, assistive technology, and other disability-related needs.

ABLE accounts can be useful for managing smaller amounts of money, including certain settlements, gifts, or savings.

However, they have important limitations, including annual contribution limits, eligibility requirements, and potential Medicaid recovery provisions.

ABLE accounts are not necessarily a replacement for a special needs trust. Families may benefit from using both tools as part of a coordinated financial plan.

 

Updating Your Estate Plan After Divorce or Remarriage

Divorce and remarriage can significantly change a family’s financial and legal circumstances.

Unfortunately, estate planning documents are sometimes overlooked during these transitions.

After a divorce, individuals should review their wills, powers of attorney, trusts, life insurance policies, retirement accounts, and beneficiary designations.

Beneficiary designations deserve particular attention because assets such as life insurance proceeds and retirement accounts often transfer directly to named beneficiaries rather than according to instructions in a will.

For parents of children with special needs, these decisions are especially important.

Naming a child with disabilities directly as a beneficiary could unintentionally interfere with government benefits. In some situations, naming a properly structured special needs trust instead may be the better approach.

Blended families face additional considerations. A parent who remarries may want to provide for a new spouse while also ensuring that children from a previous relationship remain financially protected.

Trusts, prenuptial agreements, and postnuptial agreements can help clarify expectations and establish protections for family members.

A carefully coordinated estate plan can reduce uncertainty and help ensure that assets are distributed according to the individual’s intentions.

 

Planning for Future Caregivers

Financial planning is only one part of protecting a loved one with disabilities.

Families must also consider who will provide care if a parent or primary caregiver becomes unable to continue in that role.

Potential caregivers may include another parent, siblings, relatives, or other trusted individuals.

These conversations should happen well in advance. Families should consider whether the proposed caregiver is willing and able to assume the responsibility, what support they would need, and how the individual’s daily routine and living arrangements would be maintained.

Parents may also be able to nominate a future guardian through a will or another legally recognized document.

Although the court ultimately determines who should serve as guardian, a properly documented nomination can provide valuable guidance regarding the parent’s wishes.

When divorced parents disagree about guardianship arrangements, practical considerations such as the individual’s living situation, medical needs, and relationship with each parent should remain central to the decision-making process.

 

Planning Ahead Can Make a Meaningful Difference

Families caring for loved ones with disabilities often face legal and financial decisions that evolve over time.

The transition to adulthood, changes in government benefits, divorce, remarriage, and the loss of a caregiver can each introduce new challenges.

Early planning can help families avoid interruptions in benefits, unnecessary legal expenses, and uncertainty about future care.

By coordinating family law, estate planning, special needs trusts, and disability benefits, families can build a stronger foundation for long-term security.

 

Get Guidance for Your Family’s Future

Every family’s circumstances are different, and navigating the intersection of family law, disability benefits, and estate planning can be complex. Working with attorneys who understand these overlapping areas can help families make informed decisions and develop plans that reflect their loved ones’ needs.

For assistance with special needs trusts, guardianships, conservatorships, Medicaid planning, and estate planning, visit Gulf Coast Elder Law to learn more about attorney Stephanie Booth’s services.

For more helpful discussions about legal matters affecting families, listen to the Herlihy Family Law Podcast, where attorneys and community professionals share insights on divorce, custody, financial planning, and other important family law topics.

If you are facing divorce, child support concerns, custody issues, or other family law matters in Alabama, the team at Herlihy Family Law is here to help. Visit the website to learn more about the firm’s services and schedule a consultation.

This article is provided for general informational purposes and is not legal advice. Eligibility for public benefits and the legal requirements for trusts, guardianships, and support arrangements depend on individual circumstances and applicable law.