Guardians or parents of a disabled child may apply for income from the Social Security Administration under the Supplemental Security Income program (SSI). This benefit can be essential both financially as well as by opening the door to other key benefits, such as Medicaid, SNAP (formerly food stamps), and other state-provided social services. The disabled person must be a citizen of the United States or a legal permanent resident and must meet eligibility requirements as to disability. The disabled person must also meet asset and income related requirements (2012 numbers): (1) Having less than $2,000 in “resources” or assets; and (2) $705.25 or less per month in income (the first $20 is exempt).
Many well-intentioned family members and friends, however, jeopardize this critical benefit by their uninformed actions. These actions include:
- Gifting.
- Designating the disabled person as beneficiary on insurance policies.
- Child support. One-third of child support payments received on a monthly basis are deducted in calculating the amount of income imputed to the disabled person.
The proper course of action is to deposit funds into, or designate as policy beneficiary, a Trust for the disabled person. Note there are several types of trusts that are typically used for these circumstances, generally a grantor-provided Special Needs Trust or third-party provided Supplemental Benefits Trust. A key difference between the two relates to treatment of remaining funds upon the disabled person’s death. Generally speaking, a properly-drafted Special Needs Trust requires that any remaining funds in the Trust must upon the death of the disabled person reimburse the State. This contrasts with the upon-death provision in a Supplemental Benefits Trust, which allows payment to a different beneficiary (e.g., a sibling).
