Social Security Planning Tips for a Loved One with Special Needs
A challenging and crucial element of special needs planning involves staying current with the continually evolving policies and regulations of public assistance agencies, like the Social Security Administration.
These ever-evolving policies have an immediate effect for someone on public benefits. Without staying up to date, this could lead to a reduction in benefits or even full termination. This happens all the time.
Often, I’ll receive a call from a panicked mother asking what I can do to get her child back on benefits. Sadly, even if we appeal, the process could take months and not only may benefits be terminated, but there might be a payback amount to the state before qualifying for benefits again.
The same is true if a policy has become more lenient, but the person receiving public benefits is unaware of that change, then the person could be restricting themselves. The language of a special needs trust must be carefully crafted so that it will accommodate the beneficiary regardless of policy changes.
It’s also important to provide language in the trust that can allow for a possible modification if needed, while still maintaining the irrevocable nature of the trust. While social security does not technically “approve” special needs trusts, they will deny a claim for benefits based on a defective trust or the improper use of special needs trust monies.
I see this all the time with the beneficiaries at Life Enrichment. If a trust is transferred to us, the first thing I do is review the language and the requirements for the state the trust originated.
Recently, Social Security lightened its stance on reimbursements to third parties from a special needs trust for purchases made on behalf of the beneficiary. If a trust reimbursed mom and dad for buying a medically necessary piece of equipment for their child, this would have been treated as income to the child.
This restriction made things pretty tough but in February 2013, Social Security changed their regulation. Now, so long as the reimbursements do not involve food or shelter expenses, reimbursements aren’t considered income to the beneficiary.
You may ask why is this an important estate planning tip? With the change in our political climate, no one knows what the rules may be like tomorrow… the rules are lengthy and complicated. Make sure you are asking the questions to the right professionals or your child may lose out of their benefits too.