Military With Disabled Children: A New Way to Protect Your Child

Many retired military are aware of the election of a survivorship benefit for a spouse.  In addition, those with disabled children also know that a survivorship benefit can be elected for a child with disabilities to help protect against the unknowns of their future, long after you have passed away.  Even with these best intentions for your disabled child, the election of a survivor benefit has had disastrous consequences.  Now, there’s a solution under the Disabled Military Child Protection Act Policy.

     The Problem:   As a retired service member, you had the option to set aside a portion of your retirement pay to provide a benefit to your disabled daughter upon your demise.  For a disabled child to be eligible, your daughter must be incapable of self-support because of a physical or mental disability, which existed before her 18th birthday or was incurred before the age of 22 while the child was pursuing a full-time course of study.  Your disabled daughter remains eligible to receive a survivor’s pension during her lifetime so long as: the disability continues; her income doesn’t exceeds certain limits; and/or she remains unmarried.  Even though you only intended to ensure your daughter had access to good care by providing this additional income, the military survivor benefit pension (SBP) has had the effect of disqualifying children with disabilities so that she is made ineligible to access long term supports and services provided through SSI and Medicaid.  The problem lies in the fact that the pension must be paid directly to the disabled child.  When the disabled child receives the pension, then her other government support is disrupted.  Prior to this new law, your daughter lost her benefits and became permanently disqualified for having too much income.

     The Solution:  If the pension paid directly to the child caused the child to lose benefits, why couldn’t we simply divert the pension payment to a trust for the sole benefit of the disabled child?  The Department of Veterans Affairs prohibited the payment from being made to anyone other than the disabled child.  Yet after years of advocacy to try to correct this inherent unfairness, the solution was finally put into place through federal legislation.  Through the Disabled Military Child Protection Act and the Department of Defense’s policy change, a Special Needs Trust can be established for the disabled child.  If the Special Needs Trust is established within the specific parameters outlined in the DOD’s policy, a service member can now make the election for the survivor benefit pension to be paid to this Special Needs Trust.  And by making the pension payable to the Special Needs Trust created for the benefit of the disabled dependent child, this prevents the payment coming directly to the disabled child.  With no direct payment, your disabled daughter has the best possible future:  she gets the benefit of the pension without permanently disrupting her eligibility for assistance benefits such as SSI and Medicaid and low-income housing.

     Let Us Help!  This new law provides a great way for military families to make certain they are providing their disabled children, helping with the future uncertainties for their care in their lifetime.  You have this new opportunity in your hands, but you have to make sure you have taken all the appropriate steps when making this survivor benefit election.   We have studied the new policy and we have attained the knowledge to guide you in making the election and preparing the type of trust approved by the Department of Defense.  Give us a call and let us help you!