Minor Matters: Survivor Benefits for Your Child

One of the biggest struggles parents have to deal with in estate planning is how to provide properly for their young children. When planning for the future, it is important for parents not only to name a guardian who can take in the minor child but also to consider what financial resources will be available to help care for that child. Parents too often feel caught between the desire to safeguard assets until their child is older and the urge to grant unfettered access to funds so that the child lacks for nothing. Fortunately, though, this is one situation where both desires may be achievable if the parents have a strong work history thanks to Social Security.

When we think of “Social Security,” we tend to think of retirement benefits paid out at a certain age or disability benefits received by those unable to work. For younger adults, the only thing they know about Social Security is that it shows up as a deduction taken from their paycheck. For parents, however, it is important to understand that Social Security also provides survivor benefits to your child.

Here are the basic facts you need to know:

In order for your child to be eligible for survivor benefits, you—the parent—must have worked for at least 18 months in the three years prior to your death (though, the longer you work and the higher your wages, the larger the benefit payable to your child).

Child survivor benefits can be as much as 75% of the deceased parent’s basic Social Security benefit, though there is a cap to how much is paid out to a single family.

Benefits are available to children who are under the age of 18 and unmarried.

Benefits are available to 18- and 19-year-olds who are still in high school (though the benefits end upon graduation or until two months after turning age 19, whichever comes first).

Children who have a disability are eligible for continued benefits even after turning age 18.

This is not a needs-based program. In other words, your child qualifies to receive benefits solely because he or she has lost a parent. Your child does not have to demonstrate financial hardship or need to obtain benefits.

Child survivor benefits do not pay out automatically. The child’s legal guardian will need to apply for these benefits on your child's behalf. Applying as early as possible is best as Social Security may only pay out benefits based on the application date, not the parent’s death date.

Survivor benefits are not just for children. If only one parent has died, the surviving parent may also be eligible to receive benefits if the surviving parent is caring for a child under the age of 16 or a child who has a disability. And, in this scenario, the surviving parent’s benefit is receivable even if the parents were divorced.

To see what your child is entitled to, sign up for your personal Social Security Administration account at www.ssa.gov/myaccount. Once you have activated your account, you will be able to access your Statement. Your Statement will list your annual earnings and the estimated survivor benefits for your child based off of those earnings. The Statement is released annually, so be sure to check back yearly to see how the benefit amount may change.

Once parents understand the benefits available to family members through Social Security, they will be better positioned to plan for their family’s well-being. For example, a mother who knows the immediate needs of her child will be met thanks to Social Security survivor benefits can feel at ease delaying her child’s access to his or her inheritance until later in life. While a father who feels the benefit amount is insufficient can talk with his estate planning attorney on how best to provide financially for his son or daughter in a safe and responsible manner.

If your current estate plan does not factor in child survivor benefits from Social Security or if you need to adjust your plan based on the level of benefits provided, please contact us. We'd be happy to conduct a Plan Audit and work with you to adjust your estate plan as needed.

Note: This article does not address Supplemental Security Income (SSI) benefits or the one-time death benefit of $255. To learn more about the benefits you or your family are eligible for following the death of a loved one, call SSA at 1-800-772-1213.

Phone: (919) 678-5761 Email: admin@leavealegacync.com