- For decades, a Special Needs Trust (SNT) has been the primary planning tool to protect persons with disabilities. Funds held in an SNT are not counted as a resource of the beneficiary but may be used (at the trustee’s discretion) for the benefit of a qualified person. A properly established, funded and administered SNT maintains the beneficiary’s eligibility for means-tested public benefits while supplementing the standard of living afforded to the beneficiary by said benefits.
Recent Changes in Federal Law Governing SNT’s
The Social Security Administration (SSA) is the federal agency that regulates a Special Needs Trust. The federal policies governing SNTs are documented in the agency’s Social Security Program Operations Manual System (POMS). SSA describes the POMS as “a primary source of information used by Social Security employees to process claims for Social Security benefits.” A public version of the POMS is available online.
The POMS has become the de facto law on how SNTs are evaluated by the federal government, many state agencies, and often, the courts.
In the context of SNTs, the POMS provides SSA field office personnel with operating instructions on evaluating trusts for eligibility purposes. As the U.S. Court of Appeals for the Eighth Circuit noted, “The POMS provisions demonstrate the process required for establishing a qualifying special needs trust. The purpose of the POMS is to implement ‘Congress’s command that all but a narrow class of an individual’s assets count as a resource when determining the financial need of a potential beneficiary.'”
Familiarity with the POMS is vital for providing advice to beneficiaries with a Special Needs Trust. A qualifying SNT is not considered a countable resource for purposes of public benefit eligibility, and distributions from an SNT may be structured to avoid being counted as income to the recipient. However, SNTs are not commonplace and field office workers may not be aware of or may misapply law or policies.
In April 2018, the Social Security Administration released major revisions to four POMS sections relevant to SNT establishment and administration. These revisions will be addressed in future posts.
To discuss your NJ special needs trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq., of Hanlon Niemann & Wright, a Freehold Township, Monmouth County NJ Special Needs Trust Attorney