By way of background: you may not know what a special needs trust is. It’s a document drafted to hold money for the benefit of a person with disabilities (called the “beneficiary”). The main benefit is to preserve eligibility for governmental benefits. This way, the money can be used to pay for things that the government does not explicitly cover, such as other medical supplies, transportation, and certain creature comforts. A trust is a “first-party” trust when the money would otherwise have come directly to the beneficiary, such as in a lawsuit or through other governmental benefits payable directly to them. This is as opposed to a “third-party” trust established by a family member.

When one applies for governmental benefits, first-party trusts and their trustees are carefully scrutinized to make sure only the beneficiary benefits from the trust (so, the family does not use the trust fund to buy a Corvette). Where does the government get the standards by which they judge the trusts? The answer lies in a manual published by the federal government (specifically, the Social Security Administration) called the POMS (no, they are not used in cheerleading). POMS stands for Program Operations Manual System. Lawyers look to the POMS for guidance on how to draft their trusts. The POMS and their examples now indicate that in these first-party trusts, the trust can pay for travel expenses incurred by non-beneficiaries (like family) in limited cases and still be an exempt asset (not jeopardizing eligibility for benefits). In addition, the revised POMS states that the trust can pay certain administrative expenses without violating the rules.

This is not what “big news,” but now you have an idea of the reading required to keep up with the news in the special needs/elder law planning world. It is important to make sure you consult with an attorney who does this kind of work all the time so that you do not run afoul of the latest rules and regulations.