Tina DeVore and her ex-husband James Myers shared custody of their eight-year-old son in 1997. When Ms. DeVore and her new husband were horribly injured in an automobile accident that year, Mr. Myers took over primary parental responsibility. He also asked for a review of the previous child support order, but since Ms. DeVore’s assets and income were insufficient to pay for her expensive care, the support question languished for a number of years.

By 2004, however, Ms. DeVore had filed and settled a lawsuit against the driver of the other vehicle involved in the collision. That lawsuit resulted in a substantial award payable to Ms. DeVore. Because her care was being paid for by the state/federal Medicaid program, Ms. DeVore’s lawsuit settlement was placed in a special needs trust so that it would not affect her eligibility for continued Medicaid coverage.

During 2005 the special needs trust paid $19,884 in benefits to Ms. DeVore. None of that money was paid directly to her, since her Medicaid eligibility would have been affected. Still, argued Mr. Myers, the payments for her benefit were taxable income, and that income figure should be used to calculate her child support obligation.

The judge hearing Mr. Myers’ request agreed, and ordered that Ms. DeVore pay $238.91 per month in child support. She appealed the decision to the Ohio Court of Appeals.

Ms. DeVore argued to the appellate court that her special needs trust should not be considered in setting the level of child support. Special needs trusts, she pointed out, are recognized under federal law and permit a Medicaid or Supplemental Security Income recipient to place assets beyond the reach of the welfare programs provided that they give up access and control, and provide for repayment of the state’s Medicaid payments on death of the beneficiary. Because federal law permits the trust’s assets and income to be ignored for Medicaid and SSI purposes, reasoned Ms. DeVore, they should also be ignored when calculating child support figres.

The court disagreed with that reasoning, and upheld the child support award. Federal Medicaid law does not control state child support law, ruled the judges, and Ms. DeVore’s support obligation should consider all sources of her income, including payments from her special needs trust. Myers v. DeVore, October 6, 2006.

Ms. DeVore’s child support order spotlights a problem with most special needs trusts funded with personal injury settlements. Because state law usually treats your money as available to your creditors even if set aside in a trust, special needs trust assets may not be protected despite favorable federal law. Future cases like Ms. DeVore’s child support order will undoubtedly cast additional light on the question.

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