SI KC01120.200 Revocability of Grantor Trusts (RTN 9 - 06/2017)

A. Background

Per SI 01120.201D.1.a and SI 01120.203B.1.a, trusts, including trusts that meet the exception to counting the trust under the SSI statutory trust provisions of Section 1613(e) of the Social Security Act, must still be evaluated under the instructions in SI 01120.200 to determine if an individual can revoke the trust.

According to the definitions in SI 01120.200B, a “grantor” is the individual who provides the trust principal and a “grantor trust” is a trust in which the grantor is also the sole beneficiary of the trust. SI 01120.200D.3 explains that some States follow the general principle of trust law that if a grantor is also the sole beneficiary of a trust, the trust is revocable regardless of language in the trust to the contrary.

B. Revocability of Grantor Trusts for States in the Kansas City Region

States in the Kansas City Region – Iowa, Kansas, Missouri, and Nebraska – follow the general principle of trust law summarized in SI 01120.200D.3. Absent evidence of contrary intent, if the trust document clearly reserves the grantor’s right to revoke, the trust is revocable. However, if the grantor names no other residual beneficiaries of the trust, the trust is revocable, even if the trust document says it is irrevocable

The four states also recognize that unless the grantor specifically reserves the right to revoke, the trust is irrevocable if there is a named residual beneficiary that would receive the principal of the trust upon the occurrence of some specific event, most commonly the death of the grantor.

It is important to make revocability determinations by evaluating the trust document as a whole, including the grantor’s intent.

Absent an indication of contrary intent, you may assume that a grantor intended to create residual beneficiaries by naming the grantor's heirs, heirs-at-law, survivors, distributees, child, children, issues, descendants, relatives, family, next-of-kin, and persons entitled to inherit on the grantor's death intestate or under the statute of descent and distribution, or by using words that convey a similar meaning. If there are such residual beneficiaries, the grantor cannot revoke the trust unilaterally, unless the grantor reserved the right to do so. If the trust document states the grantor’s own estate will receive any remaining trust assets on the grantor’s death, and names no other beneficiaries to the trust, the trust should be considered revocable.

1. Iowa

A trust document may provide that upon the death of the beneficiary, the State(s) will receive an amount equal to the amount of medical assistance paid on behalf of the individual under the State Medicaid plan. In Iowa, if the State may be reimbursed by a trust at the death of the recipient, then the State Medicaid agency is a residual beneficiary. Therefore, the trust would not be a revocable grantor trust.

2. Kansas, Missouri, and Nebraska

In Kansas, Missouri, and Nebraska, if the trust document provides that upon the death of the beneficiary, the State(s) will receive an amount equal to the amount of medical assistance paid on behalf of the individual under the State Medicaid plan, then the State is a creditor of the trust – in some circumstances the primary creditor – but not a beneficiary.

If, after review of the trust document, you are unable to determine the revocability of a trust, contact the Regional Trust lead on the SSI Team in the Center for Disability and Programs Support in vHelp.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0501120200KC
SI KC01120.200 - Revocability of Grantor Trusts (RTN 9 - 06/2017) - 09/09/2022
Batch run: 09/09/2022
Rev:09/09/2022