Disabled Children of Military Families Allowed to pay Military Survivor Benefits into Special Needs Trust

On December 12, 2014, Congress passed the National Defense Authorization Act of 2015 (NDAA). Among other provisions in the NDAA, Section 624 protects the disabled children of military families by allowing their parents’ survivor benefits to go into a special needs trust. This new law permits a disabled child to benefit from a parent’s military pension.  By paying the military pension into a special needs trust rather than directly to the recipient, the disabled child remains eligible for needs-based government benefits which are essential for the child’s care.

Under current law, a military retiree can have a portion of his or her monthly retirement pay withheld to provide a monthly survivor benefit after death to a surviving spouse or other eligible survivor. Service members often want to leave these benefits to a disabled child. However, until the new law was passed, the military survivor benefits only could be paid directly to the disabled child, not to a trust. As a result, the military survivor benefits are counted as income when determining eligibility for Medicaid, Supplemental Security Income (SSI) and other public benefits based upon financial need, rendering the military veteran’s disabled child ineligible for federal and state public benefits. Many disabled children rely upon these public benefits for essential services such as medical care.

These problems were corrected in the new law. The new law permits the military survivor benefits to be paid into a special needs trust for the disabled child of a deceased military veteran rather than directly to the disabled child. Special needs trusts permit assets to be held in a trust for a disabled person without being considered countable for purposes of Medicaid or SSI. As a result, the trust allows the disabled person to have supplemental funds to pay for basic living needs and extra care above that provided by the government without disqualifying the disabled person for government benefits. The new law requires use of a first party special needs trust with a Medicaid pay-back provision, meaning that any assets remaining in the trust after the beneficiary dies must be repaid to the State in which the beneficiary was residing at the time of his or her death.

The new law is annexed here – National Defense Authorization Act of 2015

For a case that achieved for the disabled children of retired police and firemen in New Jersey through a civil lawsuit the same result that was achieved for the disabled children of military families through the legislation summarized above, see Saccone v. Police and Firemen’s Retirement System.

For additional information concerning special needs trusts and disability planning, visit:

UPDATED ON JANUARY 19, 2017: As stated above, the National Defense Authorization Act for fiscal 2015 allows retired military people to assign the Survivor Benefit Plan (monthly pension for dependents, which may apply to kids with special needs) to a special needs trust.   This is for those who are retiring and those who are already retired.  Those who are already retired can do a one-time change!  This means the monthly income goes directly to the SNT.

Here is the big news.   There is a special phone number for people wanting to do this:  1-877-353-6807.