Are you a veteran with a special needs child? Did you know that the Department of Defense recently implemented the Military Child Protection Act? This allows military members and retirees to elect to have their pension annuity or the Survivor Benefit Plan (SBP) paid to a special needs trust for the benefit of a child who is “disabled” pursuant to Social Security’s definition.
This new policy allows members or retirees who elect SBP coverage for their dependent child to assign the benefit to a self-settled special needs trust (SNT) created for the benefit of the disabled child. This can be done at any time during the lifetime of the member and can be done by submitting a written statement designating future SBP payments to the SNT. The Secretary of Defense has indicated that it is not necessary to submit this request on a specific form, however, you can use Section X of DD Form 2656 to do so.
What is a self-settled special needs trust? This is a trust that is created by a parent, grandparent, guardian or court, for the sole benefit of a disabled child. The disabled child never actually has control of the funds – a family member or other third party serves as the Trustee of the trust. These are also known as D(4)(a) trusts and require a payback provision to the state that paid any Medicaid benefits on behalf of the disabled child after the disabled child’s death.
The DOD does require that the written statement include the trust’s name and tax identification number, along with a statement from an actively licensed attorney certifying that the trust satisfies the requirements of a self-settled special needs trust pursuant to federal and state law. Or, the member can obtain a certification from the Social Security Administration.
Why is this important? Because, in the event that the member or retiree does not make any designation, or if the SNT fails to qualify as a valid SNT, the SBP will revert to the dependent child and will impact their public benefits they may be receiving such as SSI (Social Security Income) and Medicaid. Many times, a disabled person who is receiving SSI and Medicaid needs those benefits which can help pay for a group home, day programs and other Medicaid services that would not be affordable with just the receipt of the SBP payment. Therefore, if you are using an attorney to draft the SNT and/or issue the certified statement stating that the trust satisfies all requirements under Social Security rules, you should use an attorney who specializes in the advising and drafting of special needs trusts.
Would you like additional guidance from a knowledgable attorney? Schedule a complimentary phone consultation with Attorney Laurie Ohall by calling 813.438.8503 or online.