SI NY01120.200 Revocability of Grantor Trusts –New York and New Jersey State Law s – RTN 386

A. Background

Trusts, including those termed “Supplemental Needs Trust” (SNT) must be evaluated to determine if they are countable resources. In reviewing a trust we must consider the identities of both the grantor and the beneficiary and whether it is revocable according to the terms of the agreement and State law. In New York the trust principal is revocable, regardless of the terms of the agreement, if the grantor is the sole beneficiary of the trust. The grantor is the sole beneficiary if there is no other person or entity (such as the State of New York) holding a beneficial or remainder interest in the trust property. In New Jersey the same holds true for trusts created prior to August 29, 2000. However, in New Jersey, Medicaid Trusts created on or after August 29, 2000 are always determined to be irrevocable regardless of whether there is another individual holding a beneficial or remainder interest in the trust property or whether the trust is termed “irrevocable.”

B. State Law on Grantor Trusts and Residual Beneficiaries

1. New York

If the grantor is sole beneficiary (i.e., there is no living named co-beneficiary or residual beneficiary) of the trust, the trust is revocable and therefore a resource, regardless of the wording, i.e., some trusts state that the trust is irrevocable.

The Regional Office of General Counsel has determined that a named residual beneficiary can include: a named living individual; the term "issue" (if living and the issue of the grantor); and/or the State of New York (for Medicaid reimbursement payments made on behalf of the beneficiary; the wording will vary). The inclusion of those terms means that the grantor is not the sole beneficiary.

If the grantor is the sole named beneficiary and the trust also indicates an unnamed beneficiary, e.g., "heir," "heirs at law," "next of kin," "distributee," "estate," "issue" (if there is no living issue of the grantor), it is revocable, and therefore considered a resource. You may refer this trust to the Center for Programs Support for review.

NOTE: An irrevocable trust created on or after January 1, 2000 will generally be considered a resource for SSI purposes unless the trust meets one of the exceptions described in SI 01120.203 (e.g. Medicaid Trust or Undue Hardship).

2. New Jersey

For trusts created prior to August 29, 2000, if the grantor is sole beneficiary (i.e., there is no living, named co-beneficiary or residual beneficiary) of the trust, the trust is revocable and therefore a resource, regardless of the language of the agreement, i.e., some trusts state that the trust is irrevocable. These cases should be referred to the Center for Programs Support.

For trusts created on or after August 29, 2000 the trust is considered irrevocable if it is a Medicaid trust regardless of whether the trust says it is irrevocable.

NOTE: An irrevocable trust created on or after January 1, 2000 will generally be considered a resource for SSI purposes unless the trust meets one of the exceptions described in SI 01120.203 (e.g. Medicaid Trust or Undue Hardship).


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SI NY01120.200 - Revocability of Grantor Trusts -New York and New Jersey State Law s - RTN 386 - 02/07/2013
Batch run: 02/08/2013
Rev:02/07/2013