Burr Alert: Our Military and Special Needs Trusts for Dependents

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Prior to 2015, members of and retirees from the military could not designate any portion of their military Survivor Benefit Plan ("SBP") to a special needs trust ("SNT"), even when a child of that service member needed the protection of a SNT in order to ensure his/her access to government benefits. That rule changed in late 2014 with the passage of the legislation initially called the Military Child Protection Act, legislation subsequently rolled into and incorporated as part of the 2015 National Defense Authorization Act. On December 31, 2015, the Department of Defense ("DOD") released a memorandum (the "DOD Memorandum") describing how DOD intends to implement Congress' requirement that SNTs be available to the children of our servicemen, servicewomen and retirees when such structures are needed.

The DOD Memorandum provides that an active duty member of or retiree from the military may now, or in the future, during the member's or retiree's life, irrevocably substitute a self-settled SNT created for the benefit of a child with a disability as the SBP beneficiary rather than having the SBP annuity payments made directly to the "disabled dependent child." According to the DOD, such an election must be made via a written statement clearly designating that future SBP annuity payments are to be made to the SNT instead of being made to the disabled dependent child directly. A little surprisingly, the DOD Memorandum does not create a new form for making the election, instead it refers active military and retirees to DD Form 2656 and its Section X (Remarks). Separate statements, though, attached to DD Form 2656 are probably the better practice because of, as described below, the amount and type of information that the election statement must contain.

Download the full article, "Burr Alert: Our Military and Special Needs Trusts for Dependents".

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