Here is a checklist to get you started, by Megan A. Moghtaderi

Thanks to a recent law, most military members or veterans may now allocate their pension payments to a dependent child with special needs without fear that the payments will jeopardize the child’s receipt of other government benefits. Here are the details:

Retired members of the military can elect to fund a Survivor Benefit Plan that will pay the retiree’s survivors a monthly benefit to help make up for the loss of the deceased veteran’s retirement income. When the retiree dies, the Survivor Benefit Plan will pay up to 55 percent of the veteran’s pension to his or her spouse or children.

Until recently, if a child with special needs received the pension payment, the income from the Survivor Benefit Plan was counted as the child’s money. This put the child in danger of losing eligibility for means-tested government benefits like Supplemental Security Income (SSI) and Medicaid. In 2014, Congress passed a law and then-President Obama signed the Disabled Military Child Protection Act, allowing veteran retirees to designate a special needs trust as their beneficiary to avoid the benefit being counted as belonging to the child. 

Under the law, military families can keep SSI and Medicaid benefits intact by putting the part of their Survivor Benefit Plan that has been designated for their child with special needs into a first-party special needs trust. If any assets remain in the SNT at that time of the child’s death, the trustee must reimburse Medicaid for any costs the child incurred. 

The assignment to a special needs trust may be made during the lifetime of the military member or retiree, or after the member or retiree’s death by the child’s surviving parent, grandparent or guardian.

However, currently only those veterans who had previously designated “Spouse and Child†or “Child Only†as their beneficiary may shift the designation to a special needs trust. Many veterans with special needs children had already designated “Spouse Only†as the beneficiary to avoid jeopardizing the child’s other benefits. Due to this earlier designation, they are now blocked from switching the beneficiary to a special needs trust. Legislation was introduced earlier this year to fix this defect in the law. If you are a military member or veteran with a special needs dependent child whom you would like to be a beneficiary of your Survivor Benefit Plan, talk to your special needs planner, Megan A. Moghtaderi today.