The following guidelines should be used to evaluate whether or not the trust meets
use of benefits policies. If it is unclear whether the trust meets use of benefits
policies, you should refer the case to your regional office for possible referral
to the Regional Chief Counsel:
Is the trust established in the beneficiary’s best interests?
Determine whether the trust will provide for the beneficiary’s current and reasonably
foreseeable needs. If it does, then a transfer of benefits to such a trust can be
viewed as in the “best interests” of the beneficiary.
Will the benefits comprising the trust fund ONLY be used for purposes that would be
permitted by a representative payee on behalf of the beneficiary?
Consider trust fund expenditures for food, clothing, housing, medical care, recreation,
education, etc., as expenditures for the use and benefit of the beneficiary and in
his or her best interests.
Note: A trust may provide for reasonable compensation for the trustee to administer the
trust, as well as reasonable costs associated with legal and other necessary services.
The size and complexity of the trust makes it difficult to provide guidance on what
constitutes “excessive” fees. Decide each case on its merits. If a fee for service
payee is the trustee of the trust, refer to GN 00506.220 which describes the restrictions on collecting a fee for payee services.
Is the Title II and/or Title XVI beneficiary the sole trust beneficiary during his
or her lifetime?
The trust beneficiary is the person for whose benefit the trust exists. During the
lifetime of that individual no one but the individual must benefit from the trust.
Residual beneficiaries are permitted to receive the benefits of the trust only upon
the trust beneficiary’s death.
Example – Compliance with Use of Benefits
The trust directs that trust assets be used only to meet the beneficiary’s current
maintenance needs that are not covered by public assistance.
Rationale: Since the trust does not prevent the use of trust assets to meet the beneficiary’s
current maintenance needs, establishing a trust that would provide for the maintenance
needs not met by public assistance can be viewed as an expenditure of benefits for
the use and benefit of the beneficiary.
Example – Non Compliance with Use of Benefits
The trust prohibits that trust funds be used specifically to meet the beneficiary’s
current needs for food, clothing, housing and medical care. Trust funds are to be
used to enhance the quality of life for the trust beneficiary in the broadest sense,
including but not limited to vacation travel and transportation expenses.
Rationale: The transfer of benefits to this type of trust would be inappropriate since the
beneficiary’s current and reasonably foreseeable needs would be left unmet, thereby
violating representative payment regulations that benefits be expended to meet such
NOTE: Although the use of benefits for vacations and transportation expenses for the beneficiary
would be an improper use of benefits, it is not misuse (see GN 00602.130 and GN 00604.001B.3.).