Every once in awhile, a client who receives monthly Supplemental Security Income (“SSI”) cash benefits (in 2013, a maximum of $710/month) may find that he cannot spend the full amount on his needs (and wants). This failure to fully expend the SSI benefits may, in due time, result in the client accumulating more than $2,000 in his bank account, thus jeopardizing his ongoing eligibility for SSI and, in a majority of states, Medicaid as well.
We all know that SSI benefits are not assignable in advance of receipt to a first-party Special Needs Trust. See POMS Section GN 02410.001 and Sections SI 01120.200G.1.c and 01120.201J.1.c. However, is it permissible for an SSI recipient or his Representative Payee to transfer unused SSI benefits to a first-party SNT? The answer is “yes.”
POMS Section GN 00602.075 (“Transfer of Benefits to a Trust”) provides that a Representative Payee (or, presumably, the benefits recipient himself) is permitted to transfer Title XVI benefits (i.e. SSI) to establish and fund a trust, or to fund an existing trust, if the following prerequisites are met:
(i) establishing the trust is in the beneficiary’s best interest;
(ii) the trust is established exclusively for the use and benefit of the beneficiary to meet the beneficiary’s current and reasonably foreseeable needs; and
(iii) the SSI recipient is the sole trust beneficiary during his lifetime. See POMS Section GN 00602.075C.1. The POMS then incorporate by reference the familiar SNT requirements set forth in POMS Sections SI 01120.201, 01120.202 and 01120.203 for “guidance on trusts and how trusts established with an individual’s assets affect SSI eligibility.” See POMS GN 00602.075C.4.
POMS Section GN 00602.075D.3 then enumerates examples of trust provisions that “meet use of benefits policies,” including expenditures for “food, clothing, housing, medical care, recreation and education,” as well as reasonable compensation for trustee and other professional services. Also permissible are trust provisions which limit disbursements to “the beneficiary’s current maintenance needs that are not covered by public assistance.”
An example of impermissible trust provisions include prohibitions on disbursements for “the beneficiary’s current needs for food, clothing, housing and medical care,” while allowing disbursements only “to enhance the quality of life for the trust beneficiary in the broadest sense, including but not limited to vacation travel and transportation expenses.” Caveat: many early versions of first-party SNTs utilize just this type of impermissibly limiting language!
Thus, a first-party SNT that otherwise complies with the relevant provisions of POMS Sections SI 01120.201, 01120.202 and 01120.203 would be a permissible receptacle of excess SSI benefits paid to the (recipient or his Representative Payee) but not currently expended.
Kristen Lewis
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