Public Benefits	Overview of Benefit Programs	Spending Guide For Trustees	Confusing Nomenclature	Analyzing Benefits
	SSI	Sample Letter

SSI — Supplemental Security Income

SSI is short for Supplemental Security Income, and is available only to people who have a disability and have no other income.

SSI provides a minimal level of monthly income, the 2019 figure is $771 per month for individuals and $1,157 for couples.

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Special Needs Trust provisions do not require that the limitations on trust spending imposed by SSI rules need to be met unless the beneficiary is actually eligible for SSI. There is often an assumption that the rules are the same for all Special Needs Trusts. This is not the case. The rules that apply to SSI are by far the most stringent.

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Most trust beneficiaries do not receive SSI because they are eligible for Social Security Retirement or Social Security Disability. These have no resource or income rules attached.

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SSI does not make rules about trustees. SSI has eligibility rules that impose requirements on SSI recipients, including disclosure of income or assets that may affect eligibility. In practice, it is all but impossible to actually survive on such a limited income, and many recipients have unreported assistance. As fiduciaries, we do not assist our clients to bend the rules as a matter of good practice. The records kept by a fiduciary are detailed and can be requested by SSI. We do not want to create a situation where the client is dis-benefited by honesty.

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Instead, it is the trustee’s job to know the rules and to figure out how to assist the client. In practice it is almost always possible to get things done within that structure.

 

Limits Imposed by SSI Rules

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See the Spending Guide.  The things that a trustee is and is not able to pay for seem to many to be paradoxical. Receiving food and shelter affect eligibility, but a trip to Disneyland does not. The SSI rules are written with the apparent goal of minimizing benefits to disabled and indigent people. Thus, great ingenuity has gone into identifying ways in which some recipients are not truly needy and cutting benefits accordingly. So, if a recipient receives free rent or finds cash in the gutter or receives royalties for a patent the rule makers have made provisions for reduction in benefits.

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The SSI rules are contained in the Program Operations Manual System (POMS) which are thousands of pages long.

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In-Kind Support and Maintenance (ISM)

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ISM is the generic term for all of the things besides money that SSI rules treat as equivalent to cash, causing a reduction in the SSI grant. The more essential to life a thing is, the more likely it will be treated as ISM. Examples:

• Free Rent             • Groceries              • Property taxes             • Gas/oil/Electric             • Mortgage payment
• Water, sewer, garbage tax              • Garbage removal            • Property insurance
• Condo fees are considered ISM to the extent that they include garbage removal or other listed expenses

.Resource Limits

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Resources are things of value besides monthly income. These include bank accounts as well as things like vacation homes, interest in an LLC, or ownership of property in which the person does not reside.

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A home owned by and lived in bythe recipient is not counted, the term is “Exempt Resource”. In most circumstances one car is also an exempt resource.

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Loopholes

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SSI rules provide ways to mitigate the harshness of the income and resource limits

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The 1/3 Hit

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The POMS have two ways of addressing how an SSI recipient’s grant is to be reduced in the event that they receive ISM: The Value of the One Third Reduction (VTR) and the Presumed Maximum Value (PMV). Virtually no one knows the difference. Both methods have the same outcome: the recipients cash assistance is reduced by one-third.

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There is no limit to the value of ISM that is allowed once the 1/3 hit is applied.

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A beneficiary may elect to take the 1/3 hit for the sake of having rent for a decent place to live, or to have the trust pay for other goods and services at trust expense, and this is very often treated as a perfectly reasonable application of trust assets.

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Payments for such things must be made directly to the vendor. If the client is reimbursed for out of pocket expenses, or in any other way receives actual money, that is cash income and does reduce eligibility dollar for dollar.

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The trustee considering this choice should consult with counsel to determine if an amendment to the trust allowing this minor reduction of public benefits is allowed under the terms of the trust.

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Trust Owned Home

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A home owned by the trust in which the beneficiary resides is an exempt resource and the value of rent taxes and maintenance are not considered in determining eligibility for SSI. One must follow a trail of tears through the POMS to prove this, in the end the clients beneficial interest in the trust is equated by the POMS with an ownership interest in the house, making it exempt.

But there is a catch. The home must be owned free and clear. If there is a mortgage the rules treat the mortgage payment as ISM. (In practice this has little effect. Lenders do not do loans to trusts as a rule.)

So if a trustee pays for rent, or pays a mortgage and other property expenses, the client has a solvable problem, but living rent free in a trust owned home: no sweat.