New Guidance for Special Needs Trusts

Recently, the Social Security Administration (SSA) released new Program Operating Manual System (POMS) provisions, which are essentially a set of guidelines utilized by eligibility workers processing claims for Social Security benefits that directly relate to special needs trusts. Although we received a peek into what the POMS might look like at the Special Needs Trust Conference last October, advocates were uncertain what the final provisions would be. Much to our delight, the new POMS promote flexibility. Understanding that there were a number of updates, I have incorporated some of the highlights I believe my clients will most appreciate:


A key element of a special needs trust is the “sole benefit rule.” Essentially, the SSA has held that all distributions must be for the sole benefit of the beneficiary, and those receiving an incidental benefit must contribute a pro rata share. POMS SI 01120.201.F.3.a now establishes a new “primary benefit” rule, thus recognizing that others will inherently receive an incidental benefit and that such incidental benefit is acceptable provided the purchase was for the beneficiary. The examples provided by SSA indicate that others may reside in a home owned by the trust, but that a car purchased by the trust, which is titled in the name of a non-beneficiary, used by the non-beneficiary daily, but also used to transport the beneficiary twice a month would not be considered for the primary benefit of the beneficiary.


One controversial inconsistency among the various regions has been the treatment of caregivers. The POMS now clarifies that a caregiver may be a family member, a non-family member, or a professional agency and that such a caregiver may provide companion services.  A special needs trust may compensate such individuals for services and pay related expenses incurred by the provider during the course of service. The example provided by the SSA is payment for an admission ticket to a museum when accompanying the beneficiary.  Additionally, the POMS were updated to clearly indicate that SSA should not request evidence of training for, or the income tax information of, family caregivers.  Payment for such services shall be considered “reasonable” based on the time, effort, and prevailing rate of compensation for similar services within the geographic region.


SSA has consistently held that distributions to a pre-paid debit card owned by a beneficiary are treated like cash. The new POMS, however, clarifies that if the pre-paid debit card is owned by a special needs trust and controlled by the trustee such that the trustee is able to prevent the use of the card for food or shelter-related items, then distributions will be permitted. Although there may be a number of companies that have “administrator-managed prepaid debit cards,” the most commonly used by advocates would be True Link Financial. In fact, its the only financial product that is actually named in the POMS.


For years, the payment of non-beneficiary travel expenses, to include transportation, lodging and food, were unclear. Under the POMS, SSA has permitted that payment of non-beneficiary travel expenses when the attendance of the non-beneficiary is necessary to permit the beneficiary to travel. This would be applicable in the situations where a minor cannot travel unaccompanied, as well as beneficiaries that require extensive medical care.  The ability for such care provider to pay his or her own travel expense is irrelevant in determining the reasonableness of the travel expense.

Additionally, the trust may pay for a non-beneficiary’s travel expenses when such travel is necessary “to ensure the safety or medical well-being of the trust beneficiary.” As a result, there is now clarification that travel expenses may be paid for by the trust when the non-beneficiary is traveling to oversee beneficiary’s living arrangements within some sort of facility or supported living arrangement. Additionally, the trust may pay for travel expenses of a trust fiduciary to ensure the welfare of the beneficiary when the beneficiary does not reside in an institutional setting.

Yvonne Amrine

AMRINE LAW #life is short, plan
Phone Number: 760-642-7072

June 19th, 2018|

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