SI CHI01120.201 Trusts

See SI 01120.201

A. Policy

A trust is a legal arrangement involving property and ownership interests. Property held in trust may or may not be considered a resource for SSI purposes. The general rules concerning resources apply to evaluating the resource status of property held in trust.

Trusts are often complex legal arrangements involving State law and legal principles that field personnel may not be able to apply without legal counsel. Therefore, when field offices discusses SSI trust policy with members of the public, do not advise a claimant, recipient, representative payee, or legal guardian on how to invest funds or hold property in trust. Remember that field personnel cannot provide the kind of financial guidance that attorneys, accountants, and financial advisors are usually able to provide. Above all, do not attempt to provide legal advice.

B. Field office responsibility

Field offices should never recommend to an individual that they establish a trust or suggest that you think a trust would be beneficial to them. Be aware that by not knowing all of the legal implications of such an action, you could endanger their eligibility for other programs or benefits (e.g., Medicaid). A trust allowing eligibility for SSI does not mean that the trust will allow eligibility for Medicaid. Suggest that the individual check with the State Medicaid office to determine the impact of a trust on Medicaid eligibility.

NOTE: If you review a draft trust, that trust will have to be reviewed again once established due to possible changes.

C. Procedures

Field offices should take the following actions before referring a trust to the Regional Office (RO) for review:

  • Make sure an SSI claim or pending action is involved.

  • Make sure all relevant trust documents have been obtained (i.e., all pages of the trust, court order for court ordered trusts, any settlement statements, proof of any annuities being paid into the trust, proof of who funded the trust and the source of those funds, and the date of death for the decedent in Testamentary Trusts).

  • Use the trust decision tree and POMS (SI 01120.200) to assist with making your resource determination.

  • If you are still unable to make a determination, call the SSI Policy Staff ((312) 575-4225) and attempt to resolve the issue by phone.

  • If the trust cannot be resolved by phone, then it should be referred to the RO for review.

  • Make sure that if the trust is referred to the RO that it contains the SSN of the claimant.

Do not refer any trusts to the RO for review until all of the above steps have been taken.

D. Glossary of terms — trusts

1. Grantor

A grantor (also called a settlor or trustor) is the individual who provides the trust principal (or corpus). The grantor must be the owner or have legal right to the property or be otherwise qualified to transfer it. Therefore, an individual may be a grantor even if an agent, or other individual legally empowered to act on their behalf (e.g., a legal guardian, representative payee for Title XVI benefits, person acting under a power of attorney, or conservator), establishes the trust with funds or property that belong to the individual. The individual funding the trust is the grantor, even in situations where the trust agreement shows a person legally empowered to act on the individual's behalf as the grantor. When more than one person provides property to the trust, there may be multiple grantors. The terms trust grantor, trustor, and settlor may be used interchangeably.

2. Trustee

A trustee is a person or entity who holds legal title to property for the use or benefit of another. In most instances, the trustee has no legal right to revoke the trust or use the property for their own benefit.

3. Trust beneficiary

A trust beneficiary is a person for whose benefit a trust exists. A beneficiary does not hold legal title to trust property but does have an equitable interest in it. As an equitable owner, the beneficiary has certain rights that will be enforced by a court because the trust exists for their benefit. The beneficiary receives the benefits of the trust while the trustee holds the title and duties.

4. Testamentary trust

A testamentary trust is a trust established by a Will and effective at the time of the testator's death.

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SI CHI01120.201 - Trusts - 10/26/2022
Batch run: 10/26/2022