You asked whether a the "Jaime M. N~ Irrevocable Trust" (the N~ Trust) established
under Georgia law is irrevocable when it only designates that, upon the death of Jaime
M. N~ (Claimant), the residual funds in the trust pass to the State of Georgia and
then to "the heirs of" Claimant. You also asked whether Program Operations Manual
System (POMS) SI ATL 01120.201 correctly interprets Georgia law regarding when a trust
should be considered revocable.
Although the trust meets requirements under the Agency's special needs trust exception,
it is countable as a resource available to Claimant under ordinary resource rules,
because it is not irrevocable under Georgia law. As stated in POMS SI ATL 01120.201,
a trust in Georgia is considered revocable when the trust states that the residual
of the trust will go "to my estate" or "to my heirs."
Claimant is child of Geoffrey and Diane N~ (Claimant's parents). On September 21,
1991, when Claimant was five years old, she experienced an anoxic brain injury, which
left her with extensive brain damage, primarily on the left side of her brain. On
August 15, 1996, when Claimant was about ten years old, Claimant's parents established
a trust for Claimant. The trust corpus was comprised of an initial $10.00 and settlement
funds that were payable to Claimant because of a lawsuit her parents filed on her
behalf against an ambulance company. The N~ Trust, Art. 2, §§ 1, 2. The provisions
state that its intended purpose is "to be in full compliance with . . . the provisions
and requirements contained in 42 U.S.C. Section 1396p or related Statutes . . . ." Id., Art. 3, § 1. The trust provisions further indicates that the trustee "shall pay
to . . . [Claimant] in monthly or other convenient installments, that amount of net income that will not cause [Claimant] to be ineligible for governmental financial assistance"
in the event that she receives such assistance. Id., Art. 4, § 1.1 (emphasis supplied). The trust provisions also state that the trustee
"may distribute discretionary amounts of principal for [Claimant's] special needs" that are not otherwise provided by governmental financial
assistance and benefit providers. Id., Art. 3, § 1.2 (emphasis supplied). Finally, the trust provisions state that, upon
Claimant's death, the Trustee shall distribute "the balance of the trust property
to the Department of Human Services, or its successor agency, as reimbursement to
the Medical Assistance Program of the State of Georgia, for benefits provided by them
to the Beneficiary during the Beneficiary's lifetime." Id., Art. 4, § 1.3. If any assets remain after reimbursing the State of Georgia for
medical assistance, "the remainder, after reasonable expenses and costs for maintaining
the trust, shall be distributed to the estate of [Claimant]." Id. The same distribution plan to the State and then to Claimant's "estate" would occur
if the trust were to terminate; and if there are no other persons to receive such
property, the trust balance would be distributed under the law of Georgia to Claimant's
heirs as if she died intestate. Id., Art. 5.
Claimant applied for SSI on August 9, 2004, and the Agency subsequently approved her
application. After a "limited issue" redetermination, the Agency found that Claimant's
trust was revocable due to the general language designating beneficiaries. According
to POMS SI ATL 01120.201, the residual beneficiary language in Claimant's trust was
too non-specific to render the trust, funded mostly with Claimant's assets, irrevocable
under Georgia law. Thus, Claimant was no longer eligible for SSI due to the value
of her trust, which, per the Agency's interpretation, was a countable resource. Claimant
disagrees with the redetermination finding and contends that her trust is irrevocable.
Under the Social Security Act (Act), aged, blind, or disabled individuals who meet
certain income and resource limitations are eligible for SSI. See Act § 1611(a) (42 U.S.C. § 1382(a)). "Income" is defined as funds that are earned
as wages or other employment-type compensation or as unearned income from a variety
of sources, which can be used to meet a claimant's food and shelter needs. See Act at § 1612(a)(1)-(2) (42 U.S.C. § 1382a(a)(1)-(2)); accord 20 C.F.R. § 416.1102 (2007). Resources are cash or other liquid assets or any real
or personal property that an individual owns and could convert to cash to be used
for his or her support and maintenance. See 20 C.F.R. § 416.1201(a) (2007).
The Act did not contain a specific SSI resource provisions for trusts created prior
to December 30, 1999; however, the Act contained other provisions for Medicaid trusts.
The Omnibus Budget Reconciliation Act of 1993 (OBRA) amended § 1917 of the Act to
incorporate new provisions for the treatment of trusts established on or after August
11, 1993. See OBRA, Pub. L. 103-66, 107 Stat 312, § 13611 (Aug. 10, 1993). Of relevance here, a
trust could be established for the purpose of an individual's Medicaid eligibility,
if: (1) the trust is composed only of pension, Social Security, and other income to
the individual, including accumulated income in the trust; (2) upon the death of the
individual, funds remaining in the trust are paid to the State in an amount equal
to the total medical assistance paid on behalf of the individual; and (3) the state
makes Medicaid available to individuals with incomes at or below a special income
level, but does not make Medicaid available to medically needy individuals for nursing
facility services. Act at § 1917(d)(4)(B) (42 U.S.C. § 1396p(d)(4)(B)); accord POMS § SI 0730.048 Medicaid Trusts.
For trusts created with an individual's assets before January 1, 2000, the principal
is countable as a resource for SSI purposes "if an individual (claimant, recipient,
or deemor) has legal authority to revoke the trust and then use the funds to meet
his food or shelter needs, or if the individual can direct the use to the trust principal
for his/her support and maintenance . . ." or if the trust provides for mandatory
disbursements to the beneficiary that the beneficiary could assign. See POMS SI 01120.200D. However, if the individual does not have the legal authority to revoke the trust
or direct the use of the trust assets for his or her own support and maintenance,
then the trust principal is not the individual's resource for SSI purposes. See id. The revocability of a trust and the ability to use the trust principal is determined
by the terms of the trust and/or State law. See POMS SI 01120.200D.2.
Our analysis applies through September 11, 2007 only. On September 12, 2007, Claimant's
representative amended her trust to read that upon her death, after Medicaid reimbursement,
taxes, etc, the remaining funds would be distributed to the Claimant's spouse and
descendents, per stirpes, and, if none, to Claimant's parents in equal shares, per
Georgia law controls in this case because this trust was established in Fulton County,
Georgia. See The N~ Trust, p. 10-8. Georgia law defines a trust as an equitable obligation, either
express or implied, resting upon a person by reason of a confidence reposed in him
or her, to apply or deal with property for the benefit of some other person, or for
the benefit of himself or herself and another or others, according to such confidence.
See Peach Consolidated Properties, L.L.C. v. Carter, 628 S.E.2d 680 (2006) (citing Smith v. Francis, 144 S.E.2d 439 (1965)). In Georgia, an express trust, as is present here, requires
(a) An express trust shall be created or declared in writing;
(b) An express trust shall have each of the following elements, ascertainable with
(1) An intention by a settlor to create a trust;
(2) Trust property;
(3) A beneficiary;
(4) A trustee; and
(5) Active duties imposed on the trustee, which duties may be specified in the writing
or implied by law.
CODE OF GA. ANN., § 53-12-20 (1991). Also, Georgia law states that a settlor is not
empowered to modify or revoke trust without reservation of such power -- specifically,
that "a settlor shall have no power to modify or revoke a trust in the absence of
an express reservation of such power. A power to revoke will be deemed to include
a power to modify and an unrestricted power to modify will be deemed to include a
power to revoke. Any revocation or modification of an express trust must be in writing."
CODE OF GA. ANN., § 53-12-150 (1991).
Despite these general provisions within the Georgia Code, however, longstanding caselaw
has held a settler, who is the sole beneficiary of a trust, has the right to termination
the trust despite language in the trust instrument that states the trust is irrevocable.
See Moore v. First Nat'l Bank & Trust Co. of Macon, 130 S.E. 2d 718, 721-22 (Ga. 1963). This holding was reiterated in a later Georgia
case. See Woodruff v. Trust Co. of Ga., 210 S.E. 2d 321, 324 (Ga. 1974). In 1996, several years after the current Georgia
trust law had been in effect, the court again cited with favor the holding from Moore, but distinguished that holding on the basis that the settler in that case was another
party, the beneficiary's father. See Ivey v. Ivey, 465 S.E. 2d 434, 438 (Ga. 1996). Thus, even after the 1991 law went into effect,
the concept from Moore persists that a settler/sole-beneficiary trust is revocable.
Regional POMS state that, in Georgia, the language of a trust must specify a particular
person or entity as the residual beneficiary. See POMS SI ATL 01120.201. A trust provision that states that after death of the individual
the trust will go to a specifically named person or entity or states that the trust
is to go "to my children, or issue, or descendants" is specific enough to identify
a person and the trust is irrevocable. See id. On the other hand, trust language that says that after the individual's death, the
trust will go "to my estate" or "to the heirs" of the primary beneficiary (or some
other non-specific general term) is too indefinite to create an interest in someone
who could prevent revocation. See id. Given the review of the above caselaw, this POMS remains unchanged with regard to
Here, while the Claimant's trust intended to create an irrevocable trust per the specific
language of the trust instrument, this trust is revocable under the laws of Georgia
as established in Moore. Thus, even though the trust indicates that Claimant, as the true grantor, shall have
no power to control and direct payment, remove trust property, or alter, amend, revoke,
or terminate this trust, see The N~ Trust, Art. 1, § 3, Claimant as the grantor and sole beneficiary of the trust
had unrestricted ability to revoke the trust and use the funds for her support. Her
actions of amending and reforming this trust to include appropriate residual beneficiaries
as of September 12, 2007, provides further evidence that this trust was not irrevocable.
Finally, even though this trust provides that, either at Claimant's death or at the
termination of the trust, the trustee shall first reimburse the State of Georgia for
medical assistance Claimant received for medical care, before distributing any remaining
trust amounts Claimant's estate or heirs," see The N~ Trust, Art. 4, Art. 5, those provision do not create any remainder interest
for the state. Instead, these provisions creates a "creditor" interest in the state.
See Carden v. Astrue, 2008 WL 867942, *4 (S.D. W.Va. 2008) (finding that West Virginia had not indicated
that the state was a beneficiary). The state's interest is only payable if there are
funds left in the trust when Claimant dies, after administrative costs are paid. If
nothing is left, nothing is owed the state(s). As in Carden, no Georgia statute or caselaw indicates that the state should be a residual beneficiary
rather than a creditor.
For the reasons stated above, this trust is countable as a resource available to Claimant
under ordinary resource rules because it is not irrevocable under Georgia law. Also,
the guidance stated in POMS SI ATL 01120.201 remains in force with regard to Georgia
Mary A. S~
Regional Chief Counsel
Jerome M. A~
Assistant Regional Counsel