Part Four: What is new in the Social Security Administration’s Approach to Special Needs Trusts?

Part Four: What is new in the Social Security Administration’s Approach to Special Needs Trusts?

UnknownRevisiting the “Sole Benefit Rule.”

Under Social Security Administration rules, a self-settled special needs trust must be established “for the sole benefit of” the individual.  A trust is considered established for the sole benefit of an individual if the trust benefits no one other than beneficiary at the time the trust is established or at any time during the beneficiary’s lifetime. Section SI 01120.201F.2 of the POMS

1.    The following disbursements from the trust are considered to be “for the sole benefit of” the individual.

(a)    Payments to a third party that result in the receipt of goods or services by the beneficiary are considered for the sole benefit of the beneficiary.

(b)    Payment of reasonable compensation for trustees to manage the trust, as well as reasonable costs associated with investment, legal, or other services rendered on behalf of the individual with regard to the trust.

(c)    Reimbursement to the State(s), upon the death of the beneficiary, for medical assistance paid on behalf of the beneficiary, as well as transfer of the remaining trust corpus to a residual trust beneficiary after the beneficiary’s death, are also permitted.

2.   Travel Expenses of Third Parties.

Under Section SI 01120.201F.2, Example 1, of the POMS, effective May 17, 2012, a trust which includes a provision permitting the trustee to use trust funds to pay travel expenses for the SSI recipient’s family members to visit will be considered invalid. The trust is deemed to violate the sole benefit rule, since it permits the trustee to use trust funds in a manner that will financially benefit the SSI recipient’s family.

Notwithstanding the above, effective December 18, 2012, Example 1, has been deleted from this Section of the POMS.

3.   Family Caregivers.

Under Section SI 01120.201F.2, Example 2, of the POMS, effective May 17, 2012, a trust may include a provision permitting a trustee to use trust funds to pay for attendant care needed by the SSI recipient on a daily basis. This provision will not violate the sole benefit rule since payments made for attendant care are considered payments to a third party for goods or services.

However, the POMS further provide that compensation paid to a third party should not routinely be questioned unless compensation is being paid to a family member or the examiner has some reason to question the reasonableness of the compensation.  SSA officials have indicated to some practitioners that there will be greater scrutiny of trust language authorizing compensation to both family and non-family caregivers.

On October 18, 2012, in a video telecast, Eric Skidmore, the head of Program Policy at the Office of Income Security Programs at the Social Security Administration, stated that there are no formal requirements that family members have any special training to be paid as a caregiver, so longer as the services are provided for the sole benefit of the individual. However, other practitioners have been told that trust provisions authorizing payment to caregivers must contain language that limits payments to caregivers who are ” medically certified, medically trained, or approved to provide care,” with approval coming from the state Medicaid agency to be valid.

Notwithstanding the above, effective December 18, 2012, Example 2, has also been deleted from this Section of the POMS.

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