Source: Reprinted from the May 2016 Newsletter of Sheri R. Abrams, Attorney at Law, www.sheriabrams.com
The Disabled Military Child Protection Act allows military families with special needs children to protect their children’s eligibility for public benefits while allowing them to participate in their Survivor Benefit Plan (SBP).
The military’s Survivor Benefit Plans permit monthly benefit stipends, up to 55% of the military member’s pension, to be paid for the benefit of a disabled child.
Before the implementation of this Act, benefits were required to be paid directly to the disabled child. This caused the disabled child to lose their eligibility for government benefit programs such as Supplemental Security Income (SSI) and Medicaid.
The Disabled Military Child Protection Act granted military members the authority to name a First Party Special Needs Trust as a beneficiary of their SBP. If the benefits are distributed directly to the trust, the child will remain eligible for benefits such as SSI and Medicaid.
These First Party Special Needs Trusts must be irrevocable, for the sole benefit of the disabled child, and must have a “payback” provision– meaning if there are any assets left in the trust when the beneficiary of SBP dies, the funds are paid back to Medicaid for the cost of the beneficiary’s care.
There are very specific rules that need to be followed regarding these trusts and the assignment of benefits. For example, the military requires verification from an attorney certifying that the trust is the “correct” type of trust and is in compliance with all Federal and State laws.