Room and Board Agreements and SSI

Mark E. Biernath: Hi, my name is Mark Biernath. I’m an estate planning attorney here in the Atlanta area, with a special emphasis on special needs planning. I’ve got a question here: “Our son is on SSI and is living at home. The case manager said that his SSI benefit is being reduced by one third because we are providing him housing. What should we do about that?” By providing your son housing you’re providing what Social Security calls “In-Kind Support”. Since you’re providing housing, Social Security takes the view that they don’t have to. And so they’ll reduce his benefit by the value of that in-kind support. And the one third reduction is simply the easy way for Social Security to calculate that. That’s the presumed maximum value, or PMV, is one third reduction. And so one third of his SSI benefit is reduced simply because someone else is providing either for his food or his shelter cost. What can we do in order to restore that full amount of SSI benefit? And one of the most common things is somehow your child has to pay for his room and board. And you can do this through a Room and Board Agreement or Rental Agreement and simply charge a set amount of money per month for his room and board. By having this room and board agreement, you are then able to establish to Social Security that the SSI recipient is paying for their room and board. The Room and Board Agreement should be in writing, it should reflect a reasonable amount; it has to be fair market value. And one of the questions I have heard comes up from Social Security is they’ll ask you if you’re the landlord, “Would you charge a complete stranger living in your home this amount of money?” And I’ve heard some parents say, “Well, no. We’d charge them more”. Well, if you charge a complete stranger more to live in your home, then you’re not charging your child fair market value. That means also if you’re not charging him the full amount, you are again supplementing or subsidizing the amount that they pay for their living expenses. Also, it does include boards. So the meals at home are included in that cost. And so if you have a child that either eats a lot or has a specific diet, of course, that would then increase the cost of that. Be prepared to explain that if it is significantly more, than somewhere in that 450-550 dollar range. But once you have that Room and Board Agreement in place, that needs to be presented to the case manager so that they can evaluate it and then restore the full benefit. Now, there is an issue about who can enter into the agreement. If your child has capacity, they can enter into the agreement. Once they’re over the age of 18 legally they have capacity unless, of course, you have been to court and have had that child declared incapacitated through a guardianship proceeding. If there is a guardianship in place then it must be the guardian who signs the agreement. As a planning consideration for the future, you may wish to consider whether your special needs trust contains a provision allowing the trustee to either charge the beneficiary room and board for whatever housing the trust is providing, or in the alternative, does the trustee have the discretion to accept a reduced SSI amount. Often times one of the main concerns of parents who are planning for the kids is: “What kind of living environment are they going to be in?” And if your plan is to have your house and your primary residence be owned by the special needs trust so that your child can continue to live there, your trustee needs to either be able to charge them Room and Board, or in the alternative accept that reduced SSI payment. I hope you find these videos helpful. If you have any questions or comments, we welcome you to write those below if you’re on YouTube in the comment section. Or you can send us an email at mark@biernathlaw.com