Whether the 2014 restatement of the Commonwealth Community Trust (CCT) Endowment Fund
Self-Funded Pooled Disability Trust (CCT Master Trust) satisfies the exception to
resource counting under section 1917(d)(4)(C) of the Social Security Act (Medicaid
pooled trust exception);
Whether the 2016 restatement of the CCT Master Trust satisfies the Medicaid pooled
trust exception; and
The date the 2016 restatement became effective.
The 2014 restatement does not satisfy the pooled trust exception. Per the 2014 provisions,
a for-profit corporation Trust Company of Virginia (TCVA) acted as its Trustee (or at least, co-Trustee), and the restatement did not make
clear that CCT retained supervisory authority over the management of the beneficiaries’
The 2016 restatement of the CCT Master Trust does not meet the pooled trust exception.
Although the 2016 restatement addressed the above concern by shifting the trust’s
supervision from TCVA to CCT’s board of directors, the early termination provisions
must be clarified to satisfy agency policy.
The 2016 restatement became valid on June 13, 2016, when a majority of CCT’s Board
of Directors, including its President, President-Elect, Secretary and Treasurer, signed
On December 8, 1994, the CCT Endowment Fund Board of Trustees (hereinafter “Board
of Directors”) established the CCT Master Trust. 2014 CCT Master Trust Agreement,
Preamble Recital 1. CCT created the trust fund to hold the assets of disabled individuals
pursuant to 42 U.S.C. § 1396p. Preamble ¶¶ 1 and 2. CCT’s Board of Directors and TCVA
amended the CCT Master Trust through the 2014 and 2016 restatements.
The 2014 and 2016 restatements differ in some respects. For instance, the 2016 version
adds multiple instances of supervision and/or shifting of responsibility from the
TCVA to CCT, and by adding the option for a Medicare Set-Aside (MSA) sub-account.
While the option to add the MSA sub-account does not affect the guidance provided
in this memorandum, the alteration of numerous terms from “Trustee” to “CCT” satisfies
the requirement that the CCT Master Trust be “maintained” by a non-profit association.
S~, a disabled beneficiary, executed a Joinder Agreement to join the CCT Master Trust
in July 2014. She established a trust account with $38,710.42 of her assets from the
sale of a residence. See S~ Joinder.
As a general rule, a trust established after January 1, 2000 with an individual’s
assets for his or her own benefit is considered a resource under sections 1613 and
1917 of the Act. Social Security Act (Act) §§ 1613(e), 1917(d), 42 U.S.C. §§ 1382b,
1396p(d); Program Operations Manual System (POMS) SI 01120.201. The Act provides an exception for certain trusts established under section 1917(d)(4)(A)
and (C), commonly known as the Medicaid trust exceptions. See POMS SI 01120.203. There are two types of Medicaid trust exceptions: special needs
trusts and pooled trusts (which are also a form of special needs trust). POMS SI 01120.203.A.
To qualify for the Medicaid pooled trust exception, the pooled trust must meet the
It contains the assets of a disabled individual;
Is established and maintained by a non-profit association;
Has separate accounts maintained for each beneficiary, with assets pooled for investing
and management purposes;
Has accounts established solely for the benefit of the disabled individuals;
Accounts are established through the actions of the individual, a parent, grandparent,
legal guardian, or court; and
Provides that to the extent any amounts remaining in the beneficiary’s account upon
the beneficiary’s death are not retained by the trust, the trust will pay to the State(s)
the amount remaining, up to an amount equal to the total amount of medical assistance
paid on behalf of the beneficiary under State Medicaid plan(s). To the extent that
the trust does not retain the funds in the account, the State(s) must have priority
over payment of other debts and administrative expenses, except for taxes due to the
State(s) or Federal government because of the beneficiary’s death and reasonable fees
for the administration of the trust estate for actions associated with the termination
and wrapping up of the trust.
Act § 1917(d)(4)(C); POMS SI 01120.203.B.2.
In addition to these criteria, in order for the agency not to count a trust as a resource,
the beneficiary must not be able to revoke or terminate the trust and then use the
funds to meet his/her shelter or food needs. Additionally, the beneficiary must not
be able to direct the use of the trust principal for his or her support and maintenance
under the terms of the trust. POMS SI 01120.200.D. Finally, if there is an early termination
clause (that is, termination before the beneficiary’s death), the trust must provide
that it will reimburse states for Medicaid assistance, and that any remaining funds
(except for administrative expenses and certain taxes) be disbursed to the beneficiary.
POMS SI 01120.199.F.1. However, the early termination clause does not have to satisfy these requirements
if the clause allows solely for transfer of the beneficiary’s assets from one Medicaid
pooled trust to another Medicaid pooled trust. POMS SI 01120.199.F.2.
The 2014 Restatement of CCT Master Trust
While CCT, a non-profit association, established the trust, the 2014 restatement is
ambiguous regarding the management of the CCT Master Trust. Preamble ¶1. The TCVA,
a Virginia corporation, is designated as the “sole acting Trustee,” but both TCVA
and the CCT Board of Directors are referred to as “Trustee(s).” Preamble ¶ 1. Either
way, the 2014 restatement does not make clear that CCT “maintains” or “manages” the
A Medicaid pooled trust must be established and maintained by a non-profit association.
Act §1917(d) (trust must be established and “managed by” nonprofit association); POMS
Under Virginia law, a trustee may exercise those powers “conferred by the terms of
the trust,” and may exercise certain further powers “except as limited by terms of
the trust.” Va. Code Ann. § 64.2-777(A). In addition, the exercise of a power by the
trustee is subject to the fiduciary duties prescribed by the Virginia trust code.
In accordance with Virginia law, the 2014 CCT Master Trust confers multiple powers
upon the Trustee. Because TCVA, instead of CCT, has the “managing” role of the trust
(or to the extent that TCVA and CCT’s respective roles are not clear), the 2014 restatement
does not satisfy this Medicaid pooled trust criterion.
2016 Restatement of the CCT Master Trust
Non-Profit Manages the Trust
The Social Security Act requires that a non-profit association establish and “manage”
the Medicaid trust. Act § 1917(d). The POMS provides that the non-profit must establish
and “maintain” the trust. POMS SI 01120.203.B.2.a. If a non-profit association employs the services of a for-profit entity, the
non-profit association must maintain ultimate managerial control over the trust, but
the for-profit entity may handle certain trust functions. POMS SI 01120.225.D. However,
the for-profit entity must always be subordinate to the non-profit managers of the
pooled trust. Id.
As detailed in the attached Appendix, the 2016 restatement revised all of the Trustees’
powers in the CCT Master Trust to clarify that the Trustee acts only in an administrative,
non-supervisory role. While the 2014 version granted management powers to the “Trustees”
including both CCT and TCVA, the 2016 restatement clarifies that TCVA is the only
Trustee. Preamble ¶1. Moreover, Article 1, Subsections E, F, G and H, and Article
2, Subsections D and E now provide that TCVA acts at CCT’s direction. See Appendix ‘A’. The effect of these additions is to shift ultimate managerial control
from TCVA to CCT.
The 2016 restatement limits TCVA’s power and effectively eliminates its supervisory
and/or discretionary role. Thus, while TCVA has the same fiduciary duties, the 2016 restatement makes clear that CCT controls, directs, or supervises TCVA’s
acts. Since CCT has oversight over TCVA, the 2016 restatement is consistent with the
Act and the POMS.
Establishment of the Trust, Assets of the Individual and Separate Accounts
The 2016 restatement satisfies agency policy requiring that the trust accounts be
established through the actions of the individual, a parent, grandparent, legal guardian,
or court. The trust provides that if a grantor or someone on the grantor’s behalf
executes a joinder agreement that incorporates the CCT Master Trust by reference and
CCT agrees to the joinder, the trustee will hold, administer, and distribute the income
and principal of the assets received in accordance with the CCT Master Trust provisions.
The 2016 restatement clarifies that “someone on the grantor’s behalf” is “subject
to the limitations of 42 U.S.C. § 1396p regarding a permissible Grantor representative,”
meaning that the joinder agreement must be “established through the actions of the
individual, a parent, grandparent, legal guardian, or court.” Act, § 1917(d).
The 2016 restatement satisfies the assets of the individual requirement. We note,
however, that the trustee may accept for good cause additional assets from “any source”
and that the grantor or someone on the grantor’s behalf may add “other property” to
the trust fund. Art. 1, §§ I, J. A portion of the trust consisting of a third party’s
assets must be evaluated per POMS SI 01120.200. See POMS SI 01120.200.A.2.b.
The 2016 trust satisfies the separate accounts requirement. Under the 2016 restatement,
separate sub-accounts will be maintained for each beneficiary, and the funds will
be pooled for management and investment purposes. Art. 1, § A; Art. 2, § B; Art. 5,
§ E. The trustee shall maintain records and accounts for each fund. Art. 2, §§ B,
The 2016 restatement provides that to the extent any amounts remaining in the beneficiary’s
account upon the death of the beneficiary are not retained by the trust, the trust
will “first” pay to the state the amount remaining, up to an amount equal to the total
amount of medical assistance paid on behalf of the beneficiary under State Medicaid
plan(s). Art. 1, §§ F, L. The provisions provide for reimbursement to each state in
which the beneficiary received Medicaid, and does not limit reimbursement to any state(s).
According to Article 1, section L, the trustee does not have a duty to make an inquiry
concerning any claims for any state other than Virginia and any state in which the
beneficiary resides of the date of his death. Art. 1, § L. We do not believe that
this language is problematic because the trust also provides that the trustee will
reimburse all Medicaid assistance and the POMS does not require a trust to describe
the reimbursement process.
Revocability of Trust
In order for the trust principal not to count as a resource, the beneficiary must
not be able to revoke or terminate the trust and then use the funds to meet his/her
shelter or food needs. The beneficiary must not be able to direct the use of the trust
principal for his or her support and maintenance under the terms of the trust. POMS
Article 8, Section A provides the CCT Master Trust is irrevocable. In addition, the
grantor intends that the trust fund’s income and principal not be considered income
or assets of the beneficiary. Art. 1, § C.
In Virginia, the terms of the trust prevail over the provisions of the Uniform Trust
Code, except in certain circumstances. Va. Code Ann. § 64.2-703. Virginia law allows
a settlor and beneficiaries to consent to the modification or termination of a noncharitable
irrevocable trust. Va. Code Ann. § 64.2-729(A). This suggests that a grantor who is
the sole beneficiary of a trust may be able to revoke the trust. With respect to S~,
however, she has expressly named primary successor beneficiaries. Accordingly, S~
does not have the ability to revoke the trust.
Sole Benefit & Early Termination
The following provisions state the trust is for the disabled beneficiary’s sole benefit.
At CCT’s direction, the trustee “shall regard the Trust Fund as existing solely for
the benefit of the Beneficiary and not for the benefit of the residual beneficiaries.”
Art. 1, § E. At CCT’s direction, the trustee shall pay or apply so much of the net
income or principal of the trust fund to provide for the beneficiary’s needs over
and above the basic maintenance and support and medical/dental care the beneficiary
receives from the government. Art. 1, § B. The trustee may purchase services and items
that promote the beneficiary’s happiness, welfare and development. Art. 1, § B.
However, the early termination provisions in the 2016 restatement do not appear to
satisfy agency policy.
An early termination provision must satisfy the following criteria:
Upon early termination (i.e., termination prior to the beneficiary’s death), the State(s)
would receive all amounts remaining in the trust at the time of termination up to
an amount equal to the total amount of medical assistance paid on behalf of the individual
under the State Medicaid plan(s);
Other than payment for expenses (taxes due to the State or Federal government due
to the trust’s termination and reasonable fees and administrative expenses associated
with the trust’s termination), no entity other than the trust beneficiary may benefit
from the early termination;
The beneficiary does not have the power to terminate the trust.
POMS SI 01120.199.F.1. However, an early termination clause does not have to satisfy these criteria
if the clause solely allows for a transfer of the beneficiary’s assets from one Medicaid
pooled trust to another Medicaid pooled trust. POMS SI 01120.199.F.2.
In the 2016 restatement, CCT or the court may terminate the trust during the beneficiary’s
lifetime. Art. 1, § G. In that situation, the trustee shall “first” distribute to
the states all amounts remaining in the trust at the time of termination up to an
amount equal to the total amount of medical assistance paid on behalf of the individual
under the state’s Medicaid plan. Art. 1, § G. After reimbursement to the State(s),
all remaining funds shall be distributed to the beneficiary and to no entity, other
than payment of taxes and administrative expenses allowed by POMS or to another entity as specified in Article 1, section H. Art. 1, § G. Article 1,
section H states that the trustee, as directed by CCT, may transfer the entire balance
of the trust fund to another 42 U.S.C. § 1396p trust. Art. 1, § H.
This early termination provision does not appear to satisfy POMS SI 01120.199.F.1 or 2. POMS provides that on early termination, the trust proceeds either go the
beneficiary after Medicaid reimbursement and payment of permissible administrative
expenses, OR the trust proceeds are transferred to another Medicaid pooled trust.
Here, however, the language in section G seems to conflate the beneficiary and “another
entity” provisions. In addition, the language in section H is problematic because
it is overbroad; it does not specify that the transfer must be to another Medicaid
pooled trust (i.e., the transfer must be to a section 1396p(d)(4)(C) trust as opposed
to section 1396p(d)(4) trust). The provisions (sections G and H) should be clarified
to more clearly follow POMS.
Finally, we note that Article 8, section C provides that if the CCT ceases to exist
and is not continued by another non-profit as a legal successor, the trustee may,
in its discretion, deliver and pay over the assets in the trust to a non-profit organization
that the trustee determines is serving the interests and needs of persons with special
needs in a matter consistent with the terms and purpose of this trust. Art. 8, § C.
This seems to be an early termination provision because it allows the trust to terminate
before a beneficiary’s death. This provision should be revised and clarified to satisfy
agency policy on early terminations.
Effective Date of 2016 CCT Master Trust Restatement
Amendments to the CCPT trust agreement become effective and binding upon written approval
of the CCT Board of Directors. Art. 8 § B. Actions by the CCT Board of Directors are
valid when approved by a majority of the Directors at an annual meeting, or in the
alternative, any decision or action of the Board may be approved without a meeting
by the President, President-Elect, Treasurer and Secretary of the Board. Art 4 § L.
The 2016 restatement (containing amendments to the CCT Master Trust) was signed by
the President, President-Elect, Treasurer and Secretary on June 13, 2016, and a majority
of the Board also signed the restatement on that date. As a result, the 2016 restatement
became valid on June 13, 2016, regardless of whether it was signed during an annual
meeting of the Board.
The 2014 CCT Master Trust did not satisfy the Medicaid Trust exception in part because
TCVA, a for-profit entity, managed, or at least co-managed, the trust.
We recommend that the 2016 CCT Master Trust be revised to satisfy the early termination
criteria of POMS SI 01120.199.F. Specifically, Article 1, sections G and H should be amended to more clearly delineate
between transfer of the assets to the beneficiary on early termination, and transfer
of assets to another Medicaid pooled trust (specifically, a section 1396p(d)(4)(C)
on early termination. Article 8, section C should also be amended to comply with the
early termination criteria.
The 2016 CCT Master Trust became effective June 13, 2016.