DoDI 1332.42, December 30, 2020
SECTION 6: CHILD COVERAGE 37
c. Election of an SNT Following the Death of a Covered Participant.
If an SNT was not designated during the life of the covered participant but the member or
retiree has previously elected child coverage, the dependent child’s surviving parent,
grandparent, or court-appointed legal guardian or fiduciary may irrevocably designate a SNT that
was established, in accordance with subparagraph (A) or (C) of Section 1396p(d)(4) of
Chapter 7, Title 42, U.S.C., for the sole benefit of the dependent child, either by the covered
participant or by the dependent child’s surviving parent, grandparent, or court-appointed legal
guardian or fiduciary.
d. Election of an SNT Following the Death of a Member on Active or Inactive Duty.
If a member is covered under SBP due to death on active or inactive duty, in accordance with
Paragraph 3.1.b., or who dies before making an election in accordance with Paragraph 3.1.e., and
coverage for the dependent child has been elected by the Secretary concerned, in accordance
with Paragraph 10.1.c., then a dependent child’s surviving parent, grandparent, or court
appointed legal guardian or fiduciary may irrevocably elect to designate that an SNT is
established, either by the covered participant or by the dependent child’s surviving parent,
grandparent, or court-appointed legal guardian or fiduciary.
e. Types of SNT.
There are two types of SNT that comply with Section 1396p(d)(4) of Title 42, U.S.C.:
(1) A First-Party SNT, in accordance with Section 1396p(d)(4)(A) of Title 42, U.S.C., is
a type of SNT established by the disabled dependent child’s parent, grandparent, legal guardian,
or a court for the benefit of the disabled dependent child only. Transfers into a First-Party SNT
do not prevent a person with special needs from accessing government benefits.
(2) A pooled trust, in accordance with Section 1396p(d)(4)(C) of Title 42, U.S.C., is a
type of SNT established by a non-profit organization, with individual beneficiaries creating
accounts within the larger trust. Such a trust consists of the assets of many people with special
needs in a “pool.” Transfers into a pooled trust, like transfers into a First-Party SNT, do not
prevent a person with special needs from accessing government benefits.
f. Procedure for Designating an SNT.
In order to receive payment of an SBP annuity, the SNT must be for the benefit of a person
or persons considered disabled under Section 1382c(a)(3) of Title 42, U.S.C. While an SNT is
governed by State law, an SNT must also comply with Section 1917(d)(4) of the Social Security
Act (Section 1396p(d)(4) of Title 42, U.S.C.). To elect that payment be directed to a SNT in
accordance with Paragraphs 6.4.b. through 6.4.d., the covered participant or the disabled
dependent child’s surviving parent, grandparent, or court-appointed legal guardian or fiduciary
must submit to the Director, DFAS:
(1) A statement of the decision to have the annuity paid irrevocably to the SNT with the
name and tax identification number for the SNT.