To determine if a trust has "residual beneficiaries," State law must be considered.
In Texas, Arkansas, Oklahoma, and New Mexico, State laws are essentially the same.
In these four States, the trust must be specific as to who receives the proceeds of
the trust upon the beneficiary's death in order to determine that a residual beneficiary(ies)
If a residual beneficiary(ies) exists, the trust does not have a sole beneficiary,
and thus, it is not a revocable grantor trust. State law in these four States provides
that terms such as "heirs" and "next of kin" are not considered specific enough to
be considered residual beneficiaries. Terms such as "children," "issue," and "descendants"
are specific and indicate a residual beneficiary.
If SSA determines that a trust is not a resource, this does not necessarily mean that
the Medicaid State Agency will also not count the trust as a resource. Each State
makes its own determination of a trust as a resource. (SI 01730.048) Section 1917(d) of the Social Security Act essentially provides, among other things,
that a trust will count in determining eligibility for Medicaid unless a provision
is included in the trust which provides that the State agency administering the Medicaid
program will receive all amounts remaining in the trust upon the death of the beneficiary
up to the amount of medical assistance paid out by the State on behalf of the individual.
If such language is in the trust, then the State Medicaid agency is also considered
a residual beneficiary, and thus, the trust would not be a revocable grantor trust.