A person who receives SSI (Supplemental Security Income) or is applying for SSI needs to report their resources (assets), income and transfers or gifts that they have made. If the individual is under 65, they sometimes shield their excess resources by transferring them into a first-party Special Needs Trust for their own sole benefit, which enables them to have some money on the side for supplemental needs and still receive benefits if they are otherwise eligible. The Trust has to meet specific federal criteria which are contained in the SSI statute and regulations, and which are further detailed in state regulations such as N.J.A.C. 10:71-4.11(g). Sometimes when the Trust arrangement is reviewed by the Social Security Administration caseworker, the worker determines that the Trust is nonconforming or has been improperly managed, and they issue a Notice of ineligibility.
If an adverse action is taken by the SSA, the applicant or recipient has a right to appeal, called Request for Reconsideration. The problem is that the Notice often fails to state just what the problem is, leaving the hapless individual seeking an appeal without knowing just what the issue is. The SSA has just issued an Emergency Message that is intended to solve this problem. Here it is: https://secure.ssa.gov/apps10/reference.nsf/links/03022016015517PM.
According to the new instructions, the SSA notice must inform the individual as to (1) which section of the trust agreement contains the problem or issue, (2) the citation to the specific section of the SSA POMS (Procedural and Operations Manual) which tells what the policy requirements are for that issue, and (3) a reference or link to where the reader can access the POMS online.
Depending on the specific issue and the precise wording of the Trust, some amendments might be made administratively by the Trustee, but others must be made through a state court proceeding referred to as “trust reformation.” This may take several months. In any event, the individual should preserve their rights by filing for reconsideration as well.
Call us to write, evaluate pursue legal action concerning Special Needs Trusts…. 732-382-6070