Special Needs Trust Update

January 8, 2016

Last year's defense bill gave military members and retirees the option to direct Survivor Benefit Plan (SBP) payments to a Special Needs Trust (SNT) for permanently disabled children. A SNT is a legal instrument designed to manage money that was set aside for assisting a disabled person, and is governed by State and Federal law. Once created, a SNT is irrevocable.

On December 31, 2015 DoD finally issued guidance to the Services and DFAS on how to implement the authority to make SBP payments to a legally established SNT. Affected military members and retirees will need a practicing attorney to establish a SNT and to certify that the SNT is in compliance.

Prior to this change, DFAS required payments go to a natural person. Without the ability to use a SNT, DFAS used a "Representative Payee" to accept payments on behalf of the adult child.

Allowing SBP to be deposited in a SNT allows permanently disabled military children to avoid having SBP counted against means-testing requirements for certain state and federal assistance programs. Before enactment of the recent law, military children suffered financial penalties not imposed on other similarly disabled non-military children who could have assets placed in a trust for them.

MOAA worked with Congress to include this much-needed provision in last year's defense bill and is thankful that this option is now available to families.

“The ability to use a SNT for a disabled child provides important protection for the child after the servicemember parent has passed away,” said MOAA deputy director of Government Relations, Col. Phil Odom, USAF (Ret.).

To see a copy of the directive memorandum and the specific guidance it provides click here.


Join Today

Not a member of MOAA? When you join MOAA, you become part of the strongest advocate for our military's personnel and their families. The stronger our membership is, the stronger our voice becomes. Consider joining today because every voice counts.

Rate this content