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Social Security Amendment Clarifies Special Needs Trust Expense Planning

Attorney & Counselor at Law

On May 15, 2013, the Social Security Administration (SSA) announced changes to its Program Operations Manual System (POMS) to ensure that legitimate expenditures from special or supplemental needs trust are used for the sole benefit of a disabled beneficiary even if it may impart incidental benefits for family members or others. Special and supplemental needs trusts are an exception trusts under federal law whereby funds held in such trusts are not “countable” for means-tested programs such Supplemental Security Income (SSI) and Medicaid. In effect, the government encourages a quality of life for those who are disabled.

For many years, it has been accepted that the trust could pay for a third person’s travel costs for the benefit of the beneficiary. It has been common for attorneys to use that type of language in trusts as an example of how funds in the trust could be expended. However, SSI then introduced a change in the rules whereby this would no longer be allowed (since it was the government’s position that it was not for the sole benefit of the beneficiary) causing a great uproar in the special needs trust and disabilities community and among elder law attorneys throughout the country.

SSA announced new changes to the POMS on May 15, 2013 that now permit a trust to pay a third person’s travel costs when necessary for the trust’s disabled beneficiary to get medical treatment or to or to visit the beneficiary in a long term care facility, group home or other supported living arrangement in which persons other than the family are paid to provide or oversee the living arrangement and the travel is to ensure safety or health. Thus, any trust expenditure in connection with third party travel beyond that creates a risk of disqualification for benefits.

Other recent changes to POMS include that when a trust purchases non-countable assets such as a homestead or a car, the trust or beneficiary must receive appropriate equity interest.

For more information or to schedule a consultation call our office at (214) 720-0102

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