QUESTION
You asked whether the New Leaf National Foundation Special Needs Pooled Trust (NLNF
Trust or Trust) is in compliance with the procedures governing the agency’s trust
policy. The Trust operates in multiple states, but the Trust documents state that
it is governed by Indiana law. In the particular case at issue, the Trust Beneficiary
resides in Tennessee.
SHORT ANSWER
We conclude that the NLNF Trust does not meet the pooled trust exception for self-settled
trusts under 42 U.S.C. § 1396p(d)(4)(C) because its trustee and agency provisions
are inconsistent with the statutory requirements regarding the management of pooled
trusts by non-profit entities. As such, a self-settled sub-account in the Trust would
be considered a resource for SSI purposes. We also conclude that the Trust sub-accounts
(including third-party assets in a comingled sub-account) would not be considered
resources under the regular resource rules, applying Indiana law as the relevant state
law.
BACKGROUND
New Leaf National Foundation (NLNF), an Indiana non-profit organization, established
the Trust on June 5, 2019, and serves as the Trustee. See
Trust Agreement (T.A.), Preamble; New Leaf National Foundation, About , https://newleafsnt.org/about/ (last visited July 7, 2020)) . According to its website, NLNF operates and administers
its trusts in 46 states. New Leaf National Foundation, Home , https://newleafsnt.org (last visited July 13, 2020). However, the Trust Agreement and Joinder Agreement
state that the Trust is governed by Indiana law. T.A. § 9.10; Joinder Agreement (J.A.),
Section VI, Art. 8.4.
While NLNF is named as the Trustee, the definition of “Trustee” in the Trust Agreement
also includes “its successor(s) in interest and capacity, and shall include one or
more Co-Trustee(s), if such Co-Trustees shall in the future be named as may be necessary
or advisable; said Co-Trustee(s) subject to the right of New Leaf National Foundation
to remove any Co-Trustee, which right is specifically herein reserved.” T.A. § 1.8.
The Trustee may resign at any time if it has appointed, or petitioned a court to appoint,
a successor Trustee “that meets the requirements of applicable law for the manager
of a Pooled Special Needs Trust.” T.A. § 6.2(M).
The Trust Agreement states that the Trust is “irrevocable and may not be altered,
amended, revoked, or terminated.” T.A. § 2.1. It appears that the sub-accounts are
primarily intended to be self-settled. T.A. §§ 3.1, 3.3; New Leaf National Foundation,
Frequently Asked Questions, https://newleafsnt.org/faq/ (last visited July 6, 2020). But the Trust Agreement does allow third-party contributions.
T.A. § 7.1 (referring to “amounts, other than the Beneficiary’s own property, contributed
to the Trust”).
The Trust consists of separate, individual sub-accounts that are accounted for separately
within the pooled trust, but the Trust assets are pooled for purposes of management
and investment. T.A. §§ 1.10, § 3.4. At least annually, the Trustee must report to
each Beneficiary, or the Beneficiary’s legal representative, a complete statement
of the sub-account’s assets, including disbursements and distributions during the
reporting period. T.A. § 4.4. The Beneficiaries of the Trust are disabled persons,
as defined in 42 U.S.C. § 1382c(a)(3). T.A. § 1.1. An individual sub-account is established
when a Joinder Agreement is executed by an “Account Grantor” who may be the “Beneficiary,
himself or herself, or the parent, grandparent, or legal guardian of the Beneficiary,
or a court of competent jurisdiction, in accordance with 42 U.S.C. § 1396p(d)(4)(C)(iii),
or any other person permitted by any successor statute, who establishes an Account
. . . for the benefit of a Beneficiary.” T.A. §§ 1.1, 1.2, 1.6, 3.5; see also
J.A., Sections I, II.
According to the Trust Agreement, each sub-account is established and managed “for
the sole benefit of the Beneficiary.” T.A. § 1.10; see also J.A., Section IV, Section VI, Art. 4. The Trustee has “sole and absolute discretion”
to make disbursements to or for the benefit of a Beneficiary. T.A. § 4.1; J.A., Section
VI, Art. 3. The Trust Agreement also provides that the Trustee may employ agents or
advisors “to assist Trustee, and to act without independent investigation upon their
recommendations, and instead of acting personally, to employ one or more agents to
perform any act of administration, whether discretionary or not.” T.A. § 6.2(D). The
Trustee also has authority to defend, in court or otherwise, against requests or demands
for release of income or principal to or on behalf of a Beneficiary by a health insurance
or healthcare provider or governmental department or agency to pay for equipment,
medication, or services , and the cost of such defense may be charged to that Beneficiary’s
Account. T.A. § 4.3.
The Trust Agreement includes a spendthrift provision providing that “[n]o Beneficiary
of any Account has any right or power to anticipate, pledge, assign, transfer, alienate,
or encumber their interest in the Trust in any way; nor will any such interest in
any manner be liable for or subject to the debts, liabilities, or obligations of such
Beneficiary or claims of any sort against such Beneficiary.” T.A. § 9.7.
The Trust Agreement may be terminated prior to the Beneficiary’s death under two circumstances:
(1) if the Trustee has made every reasonable attempt to continue the Trust Agreement,
but it has become impossible or impracticable to carry out the purpose of the agreement;
or (2) if a court or agency of competent jurisdiction issues a final, non-appealable
decision that the Account does not qualify as a Pooled Special Needs Trust. T.A. §
5.2(A), (B). In either instance, the Trust Agreement (1) requires Medicaid payback;
(2) specifies that other than reasonable administrative expenses, no entity other
than the Beneficiary may benefit from early termination; and (3) states that the Beneficiary
has no power of early termination. T.A. § 5.2(C). The Trust Agreement further allows
for the transfer of a sub-account to another trust established under 42 U.S.C. § 1396p(d)(4)(C),
and provides that such transfer will not result in any disbursements other than to
the successor trust established under 42 U.S.C. § 1396p(d)(4)(C) or to pay the expenses
listed in POMS SI 01120.199(F)(3). T.A. §§ 5.2(C)(iv), 6.2(N).
Upon termination of a Trust sub-account due to the death of a Beneficiary, funds remaining
in the sub-account will be distributed as follows: (1) payment of state or federal
taxes arising from the Beneficiary’s death and reasonable administrative fees associated
with the termination and wrapping up of the sub-account; (2) retention by the Charity
(i.e., NLNF) if the Beneficiary has so directed; (3) repayment of Government Benefits advanced
to or for the benefit of the Beneficiary up to an amount equal to the total medical
assistance so paid by Medicaid or a similar program, to the extent such medical assistance
has not already been reimbursed from any other source; and (4) distribution of remaining
assets to the Residual Beneficiaries named in the Joinder Agreement or, if no Residual
Beneficiaries are named or survive, to the Trust. T.A. § 5.1; J.A., Section V.
The Trust Agreement also contains a provision addressing the potential establishment
of an Achieving Better Life Experiences (ABLE) account. T.A. § 6.2(O). Under this
provision, the Trustee has the power and authority to “contribute to a qualified ABLE
account under Section 529A of the Internal Revenue Code on a Beneficiary’s behalf.”
T.A. § 6.2(O).
DISCUSSION
I. Self-Settled
Sub-Account
A. Statutory Resource Rules
Under the Social Security Act (Act), a trust created on or after January 1, 2000,
from the assets of an individual generally will be considered a resource to the extent
that the trust is revocable or, in the case of an irrevocable trust, to the extent
that any payments could be made from the trust to or for the benefit of the individual.
See 42 U.S.C. § 1382b(e); POMS SI 01120.201(D). However, as relevant here, if a trust meets the criteria of a pooled trust under
42 U.S.C. § 1396p(d)(4)(C), the trust is excluded from this rule. See
POMS SI 01120.203(D).
Here, even if the trust is irrevocable, a self-settled sub-account would be a resource
under the statutory provisions, because the Trustee has discretion to use the income
and the principal in the individual sub-accounts for the benefit of the Beneficiary
for whom the sub-account was established. T.A. § 4.1. Thus, sub-accounts that are
self-settled by the disabled individual would be resources under the statutory provisions,
unless the pooled trust exception applies.
In order to qualify for the pooled trust exception, the Trust must contain the assets
belonging to a disabled individual and satisfy the following conditions:
-
1.
The trust is established and managed by a non-profit association.
-
2.
The trust maintains a separate account for each beneficiary, but pools these accounts
for purposes of investment and management of funds.
-
3.
Accounts in the trust are established solely for the benefit of the disabled individual.
-
4.
The account is established through the actions of the individual, parent, grandparent,
legal guardian, or court.
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5.
The trust provides that, to the extent that amounts remaining in the beneficiary’s
account upon the death of the beneficiary are not retained by the trust, the trust
will pay to the state(s) from such remaining amounts in the account an amount equal
to the total amount of medical assistance paid on behalf of the beneficiary under
the State Medicaid plan(s).
See 42 U.S.C. § 1396p(d)(4)(C); POMS SI 01120.203(D).
Here, the Trust does not appear to meet the first condition of the pooled trust exception,
but would meet the other criteria for the exception.
1. The Trust Does Not Satisfy the Requirement Regarding Management by
a Non-Profit Association Because a For-Profit Entity Could Be Named as
Co-Trustee.
To satisfy the first requirement of the pooled trust exception, the trust must be
established and managed by a nonprofit association. 42 U.S.C. § 1396p(d)(4)(C)(i);
POMS SI 01120.203(D)(3). A nonprofit association may employ the services of a for-profit entity, but
the nonprofit association must maintain ultimate managerial control over the trust.
POMS SI 01120.225(D). For example, the nonprofit association must be responsible for determining the
amount of the trust corpus to invest, removing or replacing the trustee, and making
day-to-day decisions regarding the health and well-being of the beneficiaries. Id. Also, a for-profit entity must not be allowed to determine whether to make discretionary
disbursements from the trust. POMS SI 01120.225(E).
Here, the Trust was established by NLNF, a non-profit organization. T.A. Preamble;
New Leaf National Foundation, About, https://newleafsnt.org/about/. NLNF also manages the Trust as the Trustee. T.A. § 1.8, Art. 4, 6. As noted above,
the Trust Agreement defines “Trustee” to include “successor(s)” and “Co-Trustee(s).”
T.A. § 1.8. With respect to “successor(s),” the Trust Agreement specifies that if
NLNF resigns as Trustee, it must appoint or petition a court to appoint “a successor
Trustee that meets the requirements of applicable law for a manager of a Pooled Special
Needs Trust.” T.A. § 6.2(M). We believe this provision adequately conveys that any
successor Trustee must be a non-profit association, given that the Trust Agreement
defines a “Special Needs Pooled Trust” as a trust that qualifies under 42 U.S.C. §
1396p(d)(4)(C). T.A. § 1.7. However, there is no similar requirement in the Trust
Agreement that a “Co-Trustee(s)” be a non-profit association. And it appears that
any Co-Trustee exercises congruent powers to that of the Trustee. T.A. § 1.8. Thus, under the terms of the Trust, a for-profit entity could be named as Co-Trustee,
which would violate the non-profit management requirement of the pooled trust exception.
The language in Section 6.2(D) of the Trust Agreement is also problematic. It provides
that the Trustee may “employ care managers, attorneys, appraisers, accountants, investment
advisors . . . and other agents or advisors to assist Trustee, and to act without
independent investigation upon their recommendations, and instead of acting personally,
to employ one or more agents to perform any act of administration, whether discretionary
or not.” T.A. § 6.2(D). We are concerned that this broad language could permit NLNF
to cede too much managerial control of the Trust to a for-profit entity. As such,
we recommend that NLNF clarify this provision to make it clear that the nonprofit
association maintains ultimate managerial control over the Trust. POMS SI 01120.225(D).
2. The Trust Maintains Separate Sub-Accounts That Are Pooled for
Investment Purposes.
To satisfy the second requirement of the pooled trust exception, the trust must maintain
a separate account for each trust beneficiary, although it is acceptable to pool the
funds in the individual accounts for investment and management purposes. 42 U.S.C.
§ 1396p(d)(4)(C)(ii); POMS SI 01120.203(D)(4). In addition, the trust must be able to provide an individual accounting for
each individual. POMS SI 01120.203(D)(4). The Trust satisfies this requirement, as it maintains a separate sub-account
for each Beneficiary, but for purposes of investments and management of funds, the
Trustee pools the sub-accounts. T.A. § 1.10; T.A. § 3.4. The Trustee also maintains
records for each sub-account. T.A. §§ 3.4, 4.4.
3. Trust Sub-Accounts Are Established Solely for the Individual
Beneficiary’s Benefit.
To satisfy the third requirement of the pooled trust exception, the trust account
must be established for the sole benefit of the disabled individual. 42 U.S.C. § 1396p(d)(4)(C)(iii);
POMS SI 01120.203(D)(5). A trust is considered to be established for the sole benefit of an individual
if the trust benefits no one but that individual, either at the time the trust is
established or at any time for the remainder of the individual’s life. POMS SI 01120.201(F)(1). Conversely, a trust account is not established for the sole benefit of the
disabled individual if it: (1) provides a benefit to any other individual or entity
during the disabled individual’s lifetime; or (2) allows for termination of the trust
account prior to the individual’s death and payment of the corpus to another individual
or entity. POMS SI 01120.203(D)(5).
Here, both the Trust Agreement and Joinder Agreement provide that individual sub-accounts
are established and managed for the sole benefit of the Beneficiary. T.A. § 1.10;
J.A., Section IV, Section VI, Art. 4. In addition, we consider the following:
-
Benefit to Another Individual or Entity During the Disabled
Individual’s Lifetime
The Trust Agreement contains a defense clause describing the Trustee’s authority to
defend the Trust against any challenge to its denial of a distribution request from
a sub-account by a health insurance or healthcare provider or governmental department
or agency to pay for equipment, medication, or services. T.A. § 4.3. This clause states
that “[a]ny expenses incurred by the Trustee in carrying out the intent of this paragraph,
including reasonable attorney’s fees and other legal expenses, will be a proper charge
to Beneficiary’s Account.” Id. Since this provision does not appear to contemplate the use of a Beneficiary’s assets
for the benefit of another Beneficiary, we believe it satisfies the sole benefit requirement.
In addition, the Trust Agreement provides that the “Trustee may make distributions
to or on behalf of a Beneficiary even though such distributions benefit a guardian
or the person having custody of the Beneficiary if such benefit is reasonable under
the circumstances.” T.A. § 9.6. Agency policy recognizes that disbursements made for
the benefit of the Beneficiary may incidentally benefit third parties. For example,
in the context of third party payments, “[t]he key to evaluating this provision [regarding
trusts established for the sole benefit of the individual] is that, when the trust
makes a payment to a third party for goods or services, the goods or services must
be for the primary benefit of the trust beneficiary. You should not read this so strictly
as to prevent any collateral benefit to anyone else.” POMS SI 01120.201(F)(3)(a). Because the Trust Agreement allows only for an “Incidental Benefit to [a] Guardian”
that is “reasonable under the circumstances,” we believe it satisfies the sole benefit
requirement. T.A. § 9.6.
The Trust Agreement also allows the Trustee to contribute to a qualified ABLE account
on a Beneficiary’s behalf. T.A. § 6.2(O). Because the Beneficiary under the NLNF Trust
would also be the owner of the ABLE account, the distribution of the funds from the
Trust sub-account to the ABLE account would not violate the sole benefit requirement.
See POMS SI 01130.740(A) (the eligible individual is the owner and designated beneficiary of the ABLE account).
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Termination of the Trust Account Prior to the Individual’s
Death and Payment of the Corpus to Another Individual or
Entity
As noted above, the Trust Agreement contains early termination provisions. The POMS
states that an early termination clause is acceptable only if all of the following
criteria are met: (1) the state(s) receives all amounts remaining in the trust up
to an amount equal to the amount of medical assistance paid on behalf of the individual
under the state Medicaid plan(s); (2) after payment of allowable administrative expenses,[3] all remaining funds are distributed to the trust beneficiary; and (3) the power to
terminate is given to someone other than the trust beneficiary. See POMS SI 01120.199(F)(1). However, an early termination clause that solely allows for a transfer of
the beneficiary’s assets from one 42 U.S.C. § 1396p(d)(4)(C) pooled trust to another
42 U.S.C. § 1396p(d)(4)(C) pooled trust complies with SSA’s rules governing pooled
trusts. See POMS SI 01120.199(F)(2). In that case, the early termination clause must contain specific limiting
language that precludes the early termination from resulting in disbursements other
than to the secondary 42 U.S.C. § 1396p(d)(4)(C) trust or to pay for allowable administrative
expenses listed in POMS SI 01120.199(F)(3) and SI 01120.201(F)(4). See id.
Here, the Trust Agreement allows early termination under the following circumstances:
(1) if the Trustee has made every reasonable attempt to continue the Trust Agreement,
but it has become impossible or impracticable to carry out the purpose of the agreement;
or (2) if a court or agency of competent jurisdiction issues a final, non-appealable
decision that the Account does not qualify as a Pooled Special Needs Trust. T.A. §
5.2(A), (B). In either instance, the following provisions apply:
-
•
The state(s) “will receive all amounts remaining in the Account 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 the administrative expenses listed in POMS SI 01120.199(F)(3), “no entity other than the Beneficiary may benefit from the early termination
(i.e., after the reimbursement to the state(s), all remaining funds are disbursed
to the Beneficiary)”; and
-
•
“In no event will the Beneficiary have the power of early termination of the Account[.]”
T.A. § 5.2(C). In addition, t he Trust Agreement allows for the transfer of a sub-account
to another trust established under 42 U.S.C. § 1396p(d)(4)(C), and provides that such
transfer will not result in any disbursements other than to the successor trust established
under 42 U.S.C. § 1396p(d)(4)(C) or to pay the expenses listed in POMS SI 01120.199(F)(3). T.A. §§ 5.2(C)(iv), 6.2(N). These provisions comply with SSA’s policy regarding
early termination.
4. Trust Sub-Accounts Are Established by the Individual, Parent,
Grandparent, Legal Guardian, or Court.
The fourth requirement of the pooled trust exception requires that the trust account
be established through the actions of the account beneficiary or the beneficiary’s
parent, grandparent, legal guardian, or a court. 42 U.S.C. § 1396p(d)(4)(C)(iii);
POMS SI 01120.203(D)(6). Here, t he Trust Agreement provides that a Trust sub-account may be established
by an Account Grantor by executing a Joinder Agreement. T.A. § 1.1, 3.5; J.A., Section
I. An Account Grantor is defined as “a Beneficiary, himself or herself, or the parent,
grandparent, or legal guardian of a Beneficiary, or a court of competent jurisdiction,
in accordance with 42 U.S.C. § 1396p(d)(4)(C)(iii), or any other person permitted
by any successor statute.” T.A. § 1.2; see also J.A., Section II. Thus, the Trust Agreement satisfies this requirement.
5. The Trust Meets the Requirements Regarding State Medicaid
Reimbursements.
To satisfy the fifth requirement of the pooled trust exception, the trust must contain
“specific language” that provides that upon a beneficiary’s death, to the extent amounts
remaining in the beneficiary’s account are not retained by the trust, the trust will
pay to the state(s) an amount equal to the total amount of medical assistance paid
on behalf of the beneficiary under the state Medicaid plan(s). 42 U.S.C. § 1396p(d)(4)(C)(iv);
POMS SI 01120.203(D)(8). This is known as the Medicaid payback requirement of the pooled trust exception.
Here, the Trust Agreement provides that, upon termination of a sub-account following
the death of the Beneficiary, state or federal taxes due from the sub-account because
of the death of the Beneficiary and reasonable administrative fees associated with
the termination and wrapping up of the sub-account may be paid. See T.A. § 5.1(A). Such administrative expenses are allowed under POMS SI 01120.203(E)(1). Next, to the extent that the Joinder Agreement does not indicate that all
remaining sub-account assets are to be retained by the Charity, the state(s) will
be paid up to an amount equal to the total medical assistance paid by Medicaid or
a similar program , to the extent such medical assistance has not already been reimbursed
from any other source . T.A. § 5.1(C). Accordingly, the Trust satisfies the fifth
requirement of 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203(D).
In sum, we believe that a self-settled sub-account in the NLNF Trust does not satisfy
the first requirement of the pooled trust exception. Therefore, it would be considered
a resource for SSI purposes.[4]
B. Regular Resource Rules
If NLNF is able to cure the above defects and qualify for the pooled trust exception,
a self-settled sub-account in the Trust must still be evaluated under the regular
resource rules in POMS SI 01120.200 to determine if it is countable resource. See POMS SI 01120.200(A)(1), SI 01120.203(D)(1). Pursuant to POMS SI 01120.200(D)(1)(a), trust principal is a resource if: (1) the beneficiary has the legal authority
to revoke or terminate the trust and then use the funds to meet his or her food or
shelter needs, or (2) the beneficiary can direct the use of the trust principal for
his or her support and maintenance under the terms of the trust. In addition, if the
beneficiary can sell his or her beneficial interest in the trust, that interest is
a resource. Id.
First, we determine whether a self-settled sub-account in the Trust can be revoked.
This depends on the terms of the trust and applicable state law. See POMS SI 01120.200(D)(2). Here, the Trust Agreement states that the Trust “will be construed and regulated
by the laws of the State of Indiana, which will be the initial situs of the trust.”
T.A. § 9.10. Likewise, the Joinder Agreement specifies that it, along with the Trust
Agreement, “shall be governed exclusively by, and interpreted in accordance with the
laws of the United States of America and the State of Indiana.” J.A., Section VI,
Art. 8.4. As noted above, NLNF administers trusts in 46 states, and its website states
that it “abid[es] by each specific state and federal guidelines” in doing so. New
Leaf National Foundation, Home, https://newleafsnt.org/. Because the specific Beneficiary in this case resides in Tennessee, we consulted
with the Office of Program Law (OPL) as to which state’s law the agency should apply
in determining whether a self-settled sub-account can be revoked.[5] OPL advised that, if the Trust states that it is governed by Indiana law, then—absent
reason to question that it indeed is governed by Indiana law—it should be reviewed
against Indiana law by default. We see no reason to question that the NLNF Trust is
indeed governed by Indiana law[6] ; accordingly, we will apply Indiana law.
The Trust Agreement states that the Trust is irrevocable. T.A. § 2.1. We note that,
as a general principle of trust law, when a grantor is also the sole beneficiary of
a trust, the trust is revocable even if the trust document states that the trust is
irrevocable. See Restatement (Third) of Trusts § 65 Reporter’s Notes (2003) (quoting Restatement (Second)
of Trusts § 339 (1959)) ; see also POMS SI 01120.200(D), SI CHI01120.200(C). Although neither Indiana statutory nor case law specifically addresses the revocability
of an irrevocable trust where the grantor is the sole beneficiary, we believe an Indiana
court would likely follow this general trust principle.[7] However, if the trust document names a “residual beneficiary” who would receive the
trust principal upon the grantor’s death (or some other specific event), the primary
beneficiary cannot unilaterally revoke the trust, but instead needs the consent of
the residual beneficiary. See POMS SI 01120.200(D)(3), SI CHI01120.200(C). Here, the Trust is the default residual Beneficiary of each sub-account if no
other residual Beneficiaries are named or survive. T.A. § 5.1(D); J.A., Section V.
Since there will always be at least one residual Beneficiary, the Trust Beneficiaries
would not be able to revoke their sub-accounts.
Nor can the Trust Beneficiaries direct the use of the sub-account principal for their
support and maintenance under the terms of the Trust Agreement. Specifically, the
Trust Agreement and Joinder Agreement both state that NLNF, as Trustee, has sole discretion
in making all distributions from the Trust. T.A. § 4.1; J.A., Section VI, Art. 3.
Accordingly, the principal of a self-settled sub-account in the Trust would not be
considered a resource.
Further, the Trust Agreement includes a spendthrift provision that provides: “No Beneficiary
of any Account has any right or power to anticipate, pledge, assign, transfer, alienate,
or encumber their [sic] interest in the Trust in any way; nor will any such interest
in any manner be liable for or subject to the debts, liabilities, or obligations of
such Beneficiary or claims of any sort against such Beneficiary .” T.A. § 9.7. Under
Indiana law, when a grantor is also a beneficiary of a trust, a spendthrift provision
will not prevent creditors from satisfying claims from the grantor’s interest in the
trust estate. See Ind. Code Ann. § 30-4-3-2(b) (2020). However, the statute does not give transferees
(e.g. , purchasers for value) the same right to reach the assets. [8] Therefore, the spendthrift provision should be considered valid and effective to
prevent a Beneficiary from selling his or her interest in the Trust.
II. Third-Party
Contributions
Finally, we note that the Trust allows third parties to make additional contributions
to a sub-account. T.A. § 7.1. Thus, in addition to self-settled sub-accounts, the
Trust also contemplates comingled accounts containing assets from both the Beneficiary
and third parties. Agency policy provides that, in the case of a comingled trust established
on or after January 1, 2000, with the assets of both an SSI claimant (or spouse) and
third parties, the regular resource rules apply to the portion of the comingled trust
attributable to the assets of third parties, and the statutory resource rules apply
to the portion attributable to the assets of the SSI claimant (or spouse). See POMS SI 01120.200(A)(1)(b), SI 01120.201(C)(2)(c).
Here, in the event that a sub-account in the Trust receives any contributions from
a third party, the portion of the sub-account attributable to the assets of the third-party
would not be a resource under the regular resource rules. First, the Trust does not
give the Beneficiary the power to terminate his or her sub-account. See POMS SI 01120.200(D)(1)(b)(2) (beneficiary generally does not have power to terminate a trust). Second,
as discussed above, the Trust contains no provision allowing the Beneficiary to direct
the use of the Trust principal for his or her support or maintenance. Finally, with
respect to a beneficiary’s power to otherwise sell his or her beneficial interest
in the Trust, as noted above, the Trust Agreement contains a spendthrift provision.
T.A. § 9.7. Indiana generally recognizes the validity of spendthrift provisions in
trusts. See Ind. Code Ann. § 30-4-3-2(a) (2020). Accordingly, with respect to the portion of
a Trust sub-account attributable to the assets of a third party, neither the principal
nor the beneficial interest would be considered a resource.
CONCLUSION
For the reasons discussed above, we conclude that the NLNF Trust does not meet the
requirements for the pooled trust exception. Therefore, a self-settled sub-account
in the Trust would be a resource. We also conclude that the Trust sub-accounts (including
third-party assets in a comingled sub-account) would not be considered resources under
the regular resource rules.