14 May Part Five: What is new in the Social Security Administration’s Approach to Special Needs Trusts?
In drafting a special needs trust, many practitioners include a “null and void” or “savings” clause in the document. These clauses operate to cure defects in a trust and preserve the remaining trust provisions. They prevent the trust from being determined to be invalid by removing the offending language from consideration.
Under the newly enacted Section SI 01120.227 of the POMS, a null and void clause will not cure an otherwise defective trust instrument.
1. A null and void clause cannot nullify a provision that would make the trust a countable resource.
2. A null and void clause cannot overcome missing or conflicting trust provisions.
For a trust to be exempted from the SSI resource counting provisions, the trust must meet the provisions of the POMS, without regard to the presence or absence of a null and void clause. Any trust provision that fails to meet any of the required criteria must either be amended or removed, in order that the trust not be considered an available resource. Section SI 01120.227B, D, and E of the POMS.
3. 90-Day Remedial Amendment Period.
A trust that was originally approved by the Social Security Administration, and upon review is found to be defective, will continue to be exempt if the trust is amended within 90 days. The 90-day period begins on the day the trust beneficiary or representative payee is informed that the trust contains provisions that must be amended. Each previously approved trust is granted only one 90-day amendment period. This 90-day grace period only applies to trusts that were previously submitted to the Social Security Administration for approval. Section SI 01120.227A.2 of the POMS.
It does not appear that the 90-day remedial amendment period will extend to previously drafted trusts that were never submitted to the Social Security Administration for approval.
If you want to learn more about Special Needs Planning and Trusts, call our Miami office for a FREE telephone consultation now!