PR 01510.045 South Carolina
A. PR 00-217 Carla A. R~, SSN ~ Trust Agreement
DATE: April 25, 2000
The issue in this opinion is whether or not 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 opinion in the trust to the contrary.
The trust agreement states that after reimbursing the States providing medical assistance, the trustee shall distribute the remaining trust estate to two named individuals, but not to two other named individuals.
Thus, the grantor of the trust is not the sole beneficiary and the trust is considered to be irrevocable. Consequently the trust property is not a resource for SSI purposes.
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.