You have requested a legal opinion regarding the "Tim L~ Irrevocable Trust" (hereafter
"Trust") to determine whether this trust document is revocable. You have specifically
asked whether the beneficiary of the trust would be considered the grantor.
The Trust names Goldbelt, Inc., a Native Village Corporation established pursuant
to the Alaska Native Claims Settlement Act (ANCSA), Pub. L. 92-203, codified at 43
U.S.C. § 1601 et seq., as the settlor of the Trust. Goldbelt, Inc. established the
Trust on July 19, 1994 with dividends otherwise payable to the beneficiary of the
Trust, Tim L~. Article II of the Trust names the State of Alaska's Office of Public
Advocacy, Tim L~'s court-appointed full guardian, as the trustee. Trust, at p.1.
Article III of the Trust provides that "[t]he corpus of this Irrevocable Trust consists
of monies which would otherwise be paid by Goldbelt, Inc. as dividends to Tim L~ by
virtue of his ownership, pursuant to federal and state law, of 100 shares of stock
in Goldbelt, Inc." Trust, at pp. 1-2. Section 4.01(a) of Article IV of the Trust provides
that the trustee may not make any payments for L~'s ongoing support and maintenance
and that L~ may not specify, control or direct any payments. Trust, at p. 2. Section
4.02(b) of Article IV of the Trust provides that "[n]o part of the Trust corpus created
herein shall be used to supplant or replace public assistance benefits, if any, in
the form of cash, services, or otherwise, available from any state, federal, or other
governmental agency." Trust, at p. 4.
Section 4.03(a) of Article IV of the Trust provides that the Trust will terminate
upon the earliest of the following events: distribution of all of the corpus, L~'s
death, or entry of a judgment terminating the Trust after petition of the trustee
because the Trust has rendered L~ ineligible for a public benefit. Trust, at p. 6.
Section 4.03(d) governs termination of the trust due to L~'s death. In that situation,
the trustee is directed to pay expenses for the efficient administration and termination
of the Trust and then to pay Alaska's Division of Medical Assistance to reimburse
it for Medicaid benefits paid on L~'s behalf during the Trust's existence. The Trust
then directs that if there is any balance remaining in the Trust, the trustee is to
pay it in accordance with L~'s last will and testament or in accordance with the laws
of intestate succession if they apply. Trust, at pp. 6-7.
Your question is whether the beneficiary of the Trust, Tim L~, is also the grantor,
thereby making the Trust revocable.
The Social Security Administration considers property an available resource if an
individual has the right, authority or power to liquidate it. 20 C.F.R. §416.1201(a)(1)
(1997). See also POMS SI 01120.200(D)(1).
The general rule is that a trust is established by the person who provides the consideration
for the trust for which he is beneficiary even though in form, the trust is created
by someone else. Restatement (Second) of Trusts, § 156, comment f (1959). Alaska follows
the Restatement (Second) of Trusts. See e.g., Aiello v. Clark, 680 P.2d 1162 (Alaska 1984). Because the trust has been established by money which
represents dividends on shares of stock owned by Mr. L~, it can be said that L~ provided
the consideration for the trust.
The grantor trust rule provides that a grantor may revoke a trust if he is the sole
beneficiary even if the trust is labeled "irrevocable." Am.Jur.2d Trusts, § 96. See Hal v. Malstrom, 29 Wn.2d 746, 189 P.2d 471 (1948). If the trust remainder vests immediately in a
specifically named person, the trust is not revocable. See Lucas v. Velikanje, 2 Wash.App. 888, 471 P.2d 103 (1970). See also Restatement (Second) of Trusts, § 112 (1959). While we could not find any Alaska
cases directly on point, an Alaska court would most likely follow the above rules
as they are longstanding principles of trust law.
Under the grantor trust rule, the Trust would be revocable. However, because the trust
corpus consists of dividends from stock in a Native Corporation, the Alaska Native
Settlement Claims Act (ANSCA), 43 U.S.C. § 1601 et seq. applies.
ANSCA was enacted to provide a "fair and just settlement of all claims by Natives
and Native groups of Alaska, based on aboriginal land claims..." 43 U.S.C. § 1601(a).
It provides for the formation of Native Corporations which issue 100 shares of stock
to each Native living in a Corporation's region. 43 U.S.C. § 1606(g).
43 U.S.C. § 1626(c) specifically addresses the interplay of ANCSA and the Social Security
Act. The statute states in pertinent part:
In determining the eligibility of ...an individual Native ... to—-
...(2) receive aid, assistance, or benefits, based on need, under the Social Security
Act [42 U.S.C. § 301 et seq.], ...
none of the following received from a Native Corporation, shall be considered or taken
into account as an asset or resource:
(A) cash (including cash dividends on stock received from a Native Corporation) to
the extent that it does not, in the aggregate, exceed $2,000 per individual per annum;
Given the direct applicability of the above federal statute, the first issue to analyze
would be whether the Trust receives over $2,000 per year in dividend monies from the
Native Corporation. Under the above statute, up to $2,000 per year cannot be counted
as a resource. Under the grantor trust rules, any dividends received by the Trust
above $2,000 per year could be counted. The Trust does not specifically name a remainder
beneficiary. Regarding the issue of a specifically named remainder beneficiary, see also our previous opinion regarding the Jeannette B~ Living Trust, the Surrana G~ Trust,
and the H~ Family Trust, dated October 21, 1996.
Under 43 U.S.C. § 1626(c), up to $2,000 per year of dividends on stock in a Native
Corporation may not be counted as a resource for SSI eligibility purposes. L~ is the
grantor of the trust because he has provided the consideration for the Trust. He owns
stock in a Native Corporation by virtue of ANCSA. His shares of stock and the dividends
received therefrom are analogous to settlement proceeds. He received the stock by
virtue of his loss of claim to aboriginal lands. Because the Trust does not specifically
name a remainder beneficiary, the grantor trust rule would apply to any annual dividends