For military families, the Survivor Benefit Plan has long been a saving grace. It allows military retirees to provide up to 55% of their monthly retirement pay to a designated beneficiary after their death by paying a monthly premium. However, for those with special needs beneficiaries, this could often be a major concern.
The biggest question for military retirees planning for special needs beneficiaries is often, “Does providing this monthly income make them ineligible for government benefits?” And until recently, the answer to that question was “yes.” But a law implemented just last year—the 2015 National Defense Authorization Act—included a new Defense Department policy that provides major relief for military retirees with special needs beneficiaries.
According to an article from Military.com, military retirees are now able to designate certain types of Special Needs Trusts as the beneficiaries of their Survivor Benefit Plan. And this is not just for those currently creating a Survivor Benefit Plan; retirees currently paying into a Plan on behalf of a disabled child can now make a one-time decision and change the payout to a qualifying special needs trust. Even after the death of the retiree, that change can still be made by the guardian or surviving spouse.
While it took the Defense Department almost a year after the bill became law to create the new policy guidance, this is a significant step forward for military families with special needs beneficiaries. For one thing, special needs trusts with the correct language and created by an experienced estate planning attorney can protect the beneficiary’s government benefits—a major relief for parents and guardians.
For more information on planning for beneficiaries with special needs or to contact us to schedule a consultation, explore our website and contact us with your questions.
Reference: Military.com (January 9, 2016) “Benefit Change Approved for Retirees with Special Needs Children”