Jun 28 2011
Have you created a special needs trust to be the beneficiary of your SBP for your dependent adult child? Hopefully not…
The SBP does not allow the survivor annuity to be paid to a special needs trust or any trust for that matter. The beneficiary of a SBP annuity must be a person with a Social Security number. If the person designated as the beneficiary cannot manage his/her financial responsibilities, then the SBP annuity must be paid to an approved third party for the benefit of the incapacitated beneficiary.
This third party person can be a court appointed guardian, custodian or fiduciary. The annuity may also be paid to a representative payee who is responsible for the care of the beneficiary once approved by DFAS or your Service SBP administrator. To appoint a representative payee, provide your SBP administrator (DFAS for military and your pay agency for other uniform services) with the proper documentation:
- Determination of incompetency per a state court, doctor or psychologist.
- Representative Payee Form (http://www.dfas.mil/dfas/retiredmilitary/forms.html) appointing the representative payee by the Service member.
The representative payee is required to use the SBP payments solely for the benefit of the beneficiary and must certify/report this fact regularly.
MOAA has ongoing efforts on the Hill to allow special needs trusts for SBP beneficiaries. Until you read something official about the passage of a law from MOAA, please plan accordingly. See your Pay Agent’s web site or call them for details.