You requested that our office review a trust agreement that was drafted on behalf
of Carla A. R~, a minor. The corpus of the trust is a settlement that was obtained
on Carla's behalf resulting from an automobile accident. You have asked us to review
the agreement to assist your office in determining whether the corpus of the trust
is accessible to Carla and thus countable as a resource for purposes of determining
her eligibility for Supplemental Security Income (SSI) benefits. This trust was entered
into in the state of South Carolina on July 18, 1999. Joann Z. R~ was named as the
trustee. In making this determination our primary concern is whether the trust is
a valid irrevocable trust.
It is the general rule of trust law that if the grantor of a trust is also the sole
beneficiary, the trust is revocable, despite any express provision in the trust to
the contrary. Thus, a trust instrument where the grantor is designated as the life
beneficiary of the income from the trust, retains the power to revoke the trust, and
also retains the power of testamentary disposition over the remainder or corpus of
the trust, a revocable trust is created. The corpus of revocable trust is a resource
for SSI purposes.
In evaluating Carla's trust agreement we paid special attention to certain provisions
that normally are problematic. We noted the sections on distributions and testamentary
disposition found in Item Two of the trust agreement. The trust proceeds were not
to be used for Carla's ordinary care and maintenance. To the contrary, the trust agreement
provides for the payment of "special needs" and carefully defines the various types
of expenses that would be appropriate under this designation. There is a statement
in the trust agreement expressing the intention that the trust not displace or supplant
public assistance but is supplemental in nature and the trust provisions are written
to accomplish this. The trustee also has the authority to deplete the trust corpus
prior to the beneficiary's death but the trustee is prohibited from supplanting or
replacing any insurance benefits that might accrue to Carla.
We have also evaluated the testamentary distribution sections in Item Two of the trust
agreement. The trust agreement contains the following: "After reimbursing the states
providing medical assistance, Trustee shall distribute the remaining Trust Estate
to James L. R~ and James S. C~, per stirpes, but not including Carl J. R~ or Joann
Z. R~." Based on our review of this provision and the entire trust agreement, it is
our opinion that the grantor of this trust is not the sole beneficiary and the trust
is considered to be irrevocable. Consequently, the trust property would not be considered
to be a resource within the meaning of 20 C.F.R. ' 416.1201 et seq.