PS 01825.041 Oregon
A. PS 00-340 Trust Document re: Jasen R~
DATE: September 27, 2000
This opinion concerns an Oregon trust established in 1994. The opinion states that this trust is irrevocable.
The trust was established with the individual's funds from a damage settlement. Therefore, the individual is the grantor of the trust. The trust also states that, upon the individual's death, the trust will repay the State medical assistance agency for the care provided to the individual.
The trust further states that, upon the individual's death, remaining funds in the trust are to be distributed to Wildwood Personal Initiatives which is a nonprofit corporation. The opinion states that, under Oregon law, an entity such as a nonprofit corporation can be a beneficiary of a trust. Therefore, because the trust has a valid remainder beneficiary, the trust is irrevocable. NOTE: Because of a change in the Social Security Act, this precedent may only be applicable to trusts established before 1/1/00.
You have requested a legal opinion regarding the "Jasen Frank R~ Irrevocable Supplemental Needs Trust" (hereafter "Supplemental Needs Trust") to determine whether this trust document is revocable. You indicated that you advised the Portland South SSA field office that it is a revocable grantor trust and should be included as a resource to Mr. R~. You specifically asked whether 42 U.S.C. § 1396d(4)(a) is determinative.
Candace R~, mother and guardian of Jasen R~, established the subject trust on December 29, 1994. The trust names Candace R~ as grantor and trustee. Jasen Frank R~ is the sole beneficiary. Ms. R~ initially funded the trust with the balance of a settlement for damages to Jasen R~ in the amount of $7,533.28. Article 5 of the trust states the intent of the trust is to "create a supplemental and emergency fund for the benefit of the beneficiary, and not to displace any assistance which might otherwise be available to him from any public or private sources." Supplemental Needs Trust, at 1. Article 11, section 11.3 of the trust states that "[u]nder no circumstances can the beneficiary compel a distribution from the trust for any purpose." Supplemental Needs Trust, at 5.
Article 10 of the trust provides that upon the death of the beneficiary, the remaining trust property will be distributed first to any state that has provided medical assistance to the beneficiary up to the amount of monies expended on the beneficiary's behalf. Any remaining trust property will then be paid to Wildwood Personal Initiatives. Supplemental Needs Trust, at 4.
Your question is whether the Supplemental Needs Trust is revocable or irrevocable.
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 attorney has cited 42 U.S.C. § 1396p(d)(4)(A) for the proposition that because the beneficiary's mother is named the grantor and she set up the trust, the trust is not a grantor trust. While the above statute is cited in the Social Security Act (§ 1917(d)), the agency does not extend its applicability beyond the Medicaid program. The statute is contained in Title XIX of the Social Security Act, not Title XVI which covers SSI. Because the beneficiary's mother used the beneficiary's settlement proceeds to set up the trust, it is still considered a grantor trust.
The question of whether this trust is revocable turns on the issue of its remainder beneficiary. Jasen R~ is the grantor and the sole beneficiary of the trust. Therefore, if the trust names a valid remainder beneficiary, it will be considered an irrevocable trust. Likewise, if it does not, it will be considered revocable. See Am.Jur.2d Trusts, § 96; Lucas v. Velikanje, 2 Wash.App. 888, 471 P.2d 103 (1970). The trust names Wildwood Personal Initiatives as the remainder beneficiary. Wildwood Personal Initiatives is a nonprofit corporation (Telephone call to Wildwood Personal Initiatives on October 17, 1997). A person for whose benefit property is held in trust is a beneficiary. Restatement (Second) of Trusts, § 3 (4) (1959). The term "person" includes corporations and unincorporated associations. Id., comment c. Oregon follows the Restatement of Trusts. See e.g., Jimenez v. Lee, 274 Or. 457, 547 P.2d 126 (1976). ORS 65.077(4) provides that a nonprofit corporation has the power to "take by gift, devise or bequest" ... "real or personal property or any interest in property, wherever located."
Wildwood Personal Initiatives is sufficiently definite and meets the definition of a "person" for the purposes of serving as a remainder beneficiary.
The Supplemental Needs Trust is a grantor trust. However, given that the trust does not allow the beneficiary to compel a distribution under any