New Considerations for Planning with a Special Needs Trust

Special needs trusts remain a critical planning tool for individuals with disabilities, or parents with children that have disabilities. Moving into 2016, a multitude of changes are occurring within the law that require a practitioner to at least review the potential complications. These changes involve ABLE accounts, state-based entitlement programs, or even potential complications with veterans’ benefits. However, of particular concern is the revamped Social Security Administration special needs trust review process.

In 2014, the Social Security Administration (SSA) started routing all Supplemental Security Income applications that include a trust to the Regional Trust Reviewer Team. This was a response to criticism that the prior system, which simply allowed the local office to review based upon their interpretation of the Program Operations Manual System (POMS) trust guidelines, was inconsistent. As a result of the new system, unintended consequences recently started surfacing. For example, the SSA is now retroactively rejecting previously approved trusts under the redefined policy interpretations. This means special needs trusts must meet the new interpretations of the POMS trust guidelines, otherwise risk having the disabled individual disqualified from government benefits.

For those considering a special needs trust to plan for an individual with a disability or those that currently have a special needs trust, this new review process requires considering whether the redefined trust rules would disqualify the individual from receiving government benefits. If questions arise about amending a special needs trust or the process taken by a regional reviewer, an individual should consult with a trust attorney.

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