Estate PlanningSeptember 28, 2016

Members of the military can designate special needs trusts as beneficiaries of Survivor Benefit Plans

By: Hazen Law Group

Military members and retirees can now direct payment of a dependent child Survivor Benefit Plan (SBP) annuity to a special needs trust for the benefit of a disabled child. This important development allows military members and retirees to provide for a child with a disability without inadvertently disqualifying the child from important public benefit programs such as Medicaid or Supplemental Security Income. This change was passed as part of the National Defense Authorization Act of 2015, and provides that military members can irrevocably substitute a special needs trust for the benefit of a disabled child to receive any SBP annuity payments that would otherwise be payable to the child.

Military members can choose to set aside part of their retirement compensation so that upon their death, a surviving spouse or dependent child will be the recipient of a maximum of 55 percent of their retirement benefits. This regulation caused a predicament for parents of children with special needs. Previously, military retirees had to either waive the benefit or leave it directly to the disabled child, placing the child in jeopardy of losing important government benefits. This legislation allows military families to better plan for the expensive and complicated long-term needs of their disabled children.

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