Aug 8

Remand to Determine Whether Temporary Misuse of Special Needs Trust Bars Trust From Being Exempt Asset


For a period of time Susan Elias had direct access to her irrevocable first-party special needs trust (SNT) through the use of a debit card. This direct access ended when the trusteeship changed. The Social Security Administration determined Susan’s access rendered the trust a countable resource and discontinued her Supplemental Security Income (SSI) benefits, as well as requested recoupment of $18,137 for incorrectly paid benefits. An administrative law judge (ALJ) upheld the Administration’s decision. Susan appealed, arguing the ALJ erred in holding the trust was not a proper SNT and thus not an exempt asset, and that her benefits should have only been suspended during the period of misuse.

The district court held that if an individual can direct the use of the trust’s corpus, the trust should be considered a countable resource for SSI eligibility purposes. Susan’s use of a debit card freely to make purchases is substantial evidence of misuse of the trust rendering it a countable resource. But it said that held the Program Operations Manual does not fully address, nor did the ALJ adequately discuss on the record, whether the temporary misuse of a properly created SNT forever bars consideration of the trust as an exempt asset once the misuse is rectified. The court remanded for further consideration of the issue.

Elias v. Colvin, 2015 WL 4529877 (M.D. Pa. July 27, 2015)