In this opinion, the Regional Chief Counsel examines the Alaska Charities Pooled Trust to determine whether it meets the requirements for exception. The RCC concludes that the trust meets all the requirements and qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C). Accordingly, it must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

QUESTION PRESENTED

Does the Alaska Charities Pooled Trust (“Alaska Trust Agreement”) qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D, such that the trust must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (SSI) purposes?

BRIEF ANSWER

Yes. The Alaska Charities Pooled Trust qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. Accordingly, it must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

SUMMARY OF FACTS

J.S. is a disabled individual receiving SSI. See Joinder Agreement at 1; Dec. 11, 2020 email from SEA ARC MOS. In June 2019, J.S. executed a joinder agreement with Alaska Charities Pooled Trust (“APT”) to establish an individual benefit account with APT. Joinder Agreement at 1. J.S. was the beneficiary of the individual benefit account. Id. J.S. funded her account with $10,000 from a litigation recovery. Id.

In executing the joinder agreement, J.S. agreed to the terms of the Alaska Trust Agreement. Id.

ANALYSIS

A. To qualify as a pooled trust, a trust must meet six requirements.

To be eligible for SSI, the dollar value of a claimant’s countable resources cannot exceed certain statutory limits. 42 U.S.C. § 1382(a)(1)(B) & (3)(B); 20 C.F.R. §§ 416.202(d), 416.1201, 416.1205; POMS SI 01110.003(A). A trust that meets the requirements of 42 U.S.C. § 1396p(d)(4)(C) is considered to be a pooled trust, which must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

First, to be a pooled trust, the trust must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); accord POMS SI 01120.203.D.1. Second, the trust must be “established and managed by a non-profit association.” 42 U.S.C. § 1396p(d)(4)(C)(i); accord POMS SI 01120.203.D.1. Third, the association must maintain “[a] separate account . . . for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii); accord POMS SI 01120.203.D.1. Fourth, the accounts must be “established solely for the benefit of the individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.1. Fifth, the trust account must be “established . . . by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.1. Sixth, and finally, “[t]o the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State 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 plan . . . .” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.D.1. A trust that qualifies as a pooled trust must still be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

B. The Alaska Trust Agreement qualifies as a pooled trust.

The Alaska Trust Agreement meets all six requirements for a pooled trust.

1. Disabled Individual

To begin, the trust account must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); see also POMS SI 01120.203.D.2 (“[T]he individual whose assets were used to establish the trust account must be disabled for SSI purposes . . . .”).

That requirement is satisfied here. J.S. is a disabled individual and was receiving SSI payments when she enrolled in the Alaska Trust Agreement. See Joinder Agreement at 1; December 11, 2020 email from SEA ARC MOS (stating that J.S. is disabled). J.S. funded her account with $10,000 from a litigation recovery. Joinder Agreement at 1. Therefore, the Alaska Trust Agreement satisfies the first requirement.

2. Established and Managed by a Nonprofit Association

Second, the trust must be “established and managed by a non-profit association.” 42 U.S.C. § 1396p(d)(4)(C)(i); see also POMS SI 01120.203.D.3 (trust is “established and maintained by the actions of a nonprofit association”).

This requirement is satisfied, as well. According to the Alaska Trust Agreement, CPT is the settlor and trustee of the Alaska Trust Agreement and is a Florida not-for-profit corporation under Section 501(c)(3) of the Internal Revenue Code. See Alaska Trust Agreement Art. 2, § 2.1.

Charities Pooled Trust (CPT) is a fictitious name for the Institute for Health Care Advocacy, Inc. The Institute for Health Care Advocacy, Inc. is an active not-for-profit Florida corporation. See Sunbiz.org, Division of Corporations, Florida Department of State, Detail by Entity Name, http://search.sunbix.org/Inquiry/CorporationSearch/ByName (Search “Institute for Health Care Advocacy”) (last accessed March 9, 2021). The fictitious name registration for CPT expired on December 31, 2019. Sunbiz.org, Division of Corporations, Florida Department of State, Fictitious Name Detail, http://dos.sunbiz.org/scripts/ficidet.exe?action=DETREG&docnum=G09000149562 &rdocnum=G09000149562(last accessed March 9, 2021). Under Florida law, the failure of a business to register a fictitious name “does not impair the validity of any contract, deed, mortgage, security interest, lien, or act of such business . . . .” Fla. Stat. § 865.09(9)(b). Accordingly, this requirement is still satisfied in spite of the failure of the Institute for Health Care Advocacy, Inc., to maintain its registration of Charities Pooled Trust as a fictitious name.

3. Separate Accounts, Pooled for Investing

Third, to be a pooled trust, the trust must maintain a separate account for each beneficiary. 42 U.S.C. § 1396p(d)(4)(C)(ii); see also POMS SI 01120.203.D.4. However, “for purposes of investment and management of funds, the trust pools these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii); see also POMS SI 01120.203.D.4 (the “trust may pool the funds in the individual accounts . . . for purposes of investment and management of funds”). This requirement is reflected in POMS, which notes that “[t]he trust must be able to provide an individual accounting for each individual.” POMS SI 01120.203.D.4.

The Alaska Trust Agreement contains these requirements. According to its terms, “[a] separate Trust Individual Benefit Account (‘IBA’) shall be established and maintained for the sole benefit of each Trust Beneficiary, but the Trustee may cause the amounts in the IBA to be pooled for investment and management purposes.” Alaska Trust Agreement Art. 4, § 4.1; Art. 9, § 9.1 The Alaska Trust Agreement also states that the trustee, or its agent, must “maintain records for each Trust IBA in the name of, and showing the Contributed Amount plus any income earned from the Contributed Amount.” Alaska Trust Agreement Art. 4, § 4.1. The trust must maintain records showing the increases and decreases in value of each Trust Beneficiary. Alaska Trust Agreement Art. 9, § 9.1. The trust must provide periodic reports, at least annually, about receipts and disbursements to and from the individual’s account. Alaska Trust Agreement Art. 9, § 9.4. These provisions satisfy the third requirement for a pooled trust.

4. Established for the Sole Benefit of the Disabled Individual

The fourth requirement for a pooled trust is that the trust account is “established solely for the benefit of individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); see also POMS SI 01120.203.D.5 (trust “must be established for the sole benefit of the disabled individual”). The statute does not provide guidance on “sole benefit.” See 42 U.S.C. § 1396p(h) (setting forth definitions, but not defining this term). But POMS explains that a trust is “established for the sole benefit of an individual” when it “benefits no one but that individual, whether 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.

The trust may pay third parties for goods or services for the beneficiary and still be for the “sole benefit” of the beneficiary. POMS SI 01120.201.F.3. The trust also may “provide for reasonable compensation for (a) trustee(s) to manage the trust and reasonable costs associated with investment, legal, or other services rendered on behalf of the individual with regard to the trust.” POMS SI 01120.201.F.4.

The Alaska Trust Agreement meets this definition. The Alaska Trust Agreement states that the trustee “shall hold, administer, and distribute all property, and all income therefrom from an Individual Trust Beneficiary’s IBA, for the sole benefit of the Trust Beneficiary during the Trust Beneficiary’s lifetime and after Trust termination.” Alaska Trust Agreement Art. 6, § 6.2 (emphasis in original); see also id. § 6.3 (“Trust Beneficiary’s IBA is for the sole benefit of the Trust Beneficiary”) (emphasis in original).

The Alaska Trust Agreement also allows for fees in accordance with a written fee schedule and expenses for administering the trust. See Alaska Trust Agreement Art., § 9.2, Art. 10, § 10.5. The Alaska Trust Agreement further states that the trustee will be compensated for “services rendered and reimbursed reasonable expenses incurred on behalf of the Trust or a Trust Beneficiary.” Alaska Trust Agreement Art. 10, § 10.5. Additionally, the Alaska Trust Agreement allows for charges of pro rata legal fees to all individual trust accounts, or to accounts of affected beneficiaries, and the trustee will determine “if defense costs affect a substantial number of Trust beneficiaries” and warrant allocation. Alaska Trust Agreement Art. 10, § 10.6. These provisions pass muster under the statute because they constitute “reasonable costs associated with investment, legal, or other services rendered on behalf of the individual with regard to the trust.” POMS SI 01120.201.F.4

The Alaska Trust Agreement contains an early termination provision that accounts for a scenario where the trust terminates prior to the death of the beneficiary. See Alaska Trust Agreement Art. 8. An early termination provision is allowable under the pooled-trust exception so long as three criteria are met: (1) if a Trust Beneficiary’s IBA is terminated prior to the death of the Trust Beneficiary, “[u]pon early termination (i.e., termination prior to the death of the beneficiary), the State(s), as primary assignee, 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);” (2) “[o]ther than payment for those expenses [for taxes, reasonable fees, and administrative expenses], no entity other than the trust beneficiary may benefit from the early termination (i.e., after reimbursement to the State(s), all remaining funds are disbursed to the trust beneficiary);” and (3) “[t]he early termination clause gives the power to terminate to someone other than the trust beneficiary.” POMS SI 01120.199.E.1 (bold in original). The trust may pay taxes, reasonable fees, and administrative expenses before reimbursing any state(s) for medical assistance. POMS SI 01120.199.E.3.

The Alaska Trust Agreement satisfies these criteria. Specifically, the Alaska Trust Agreement states that, if the trust terminates during the beneficiary’s life, all remaining funds in that account will be paid to reimburse each state for medical assistance paid on behalf of the beneficiary. Alaska Trust Agreement Art. 8, § 8.1. The Alaska Trust Agreement also states that, after paying the states, “if there are any assets remaining, the Trustee shall distribute all of the remaining assets to the Trust Beneficiary.” Alaska Trust Agreement Art. 8, § 8.1. Additionally, the beneficiary does not have the power to terminate his or her trust account. Alaska Trust Agreement Art. 8, § 8.1.^[1]

In the end, the Alaska Trust Agreement provisions comport with the statute and POMS’s description of a trust that solely benefits the disabled individual. Accordingly, the Alaska Trust Agreement satisfies the fourth requirement for pooled trusts.

5. Established Through the Actions of the Individual, Parent, Grandparent, Legal Guardian, or Court

Fifth, to qualify as a pooled trust, the trust account must be “established . . . by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.6. J.S. executed a joinder agreement, which established her account in the Alaska Trust. See Joinder Agreement at 1. Therefore, because J.S. established her trust account through her own actions, the Alaska Trust Agreement meets the fifth requirement.

6. Remaining Amounts Paid to the State

Sixth, “[t]o the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State 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 plan.” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.D.8. Taxes and reasonable fees and costs may be paid before paying the state for medical assistance. See POMS SI 01120.203.E.1.

The Alaska Trust Agreement meets this requirement, as well. Specifically, the Alaska Trust Agreement allocates remaining assets between the trust, the state(s), and the trustee’s heirs. See Alaska Trust Agreement Art. 7, § 7.2. If the state medical assistance amount is equal to or greater than the total amount left in the beneficiary’s trust account, the non-profit will retain 50 percent of that amount as a trust remainder share and the trustee will pay the remaining amount to the state. Alaska Trust Agreement Art. 7, § 7.2(D)(1). If the state medical assistance amount is less than the total amount left in the beneficiary’s trust account, the non-profit will retain the first 5 percent of the amount as the trust remainder share; the trustee will pay the full amount owed to the state; and the trustee will pay any remaining amount to the beneficiary’s heirs. Alaska Trust Agreement Art. 7, § 7.2(D)(2). This distribution scheme comports with the statute.

In addition, the Alaska Trust Agreement allows certain administrative expenses, like taxes and reasonable fees and costs, to be paid before paying the state for medical assistance. Alaska Trust Agreement Art. 7, § 7.4(A). The Alaska Trust Agreement also permits distribution of assets to pay debts owed to the Trust, for the Trust Beneficiary’s funeral expenses, and to third parties, respectively, but only after payment has been made to the state(s) for medical assistance consistent with POMS. Alaska Trust Agreement Art. 7, § 7.5(A); POMS SI 01120.203(E)(2). Accordingly, the Alaska Trust Agreement satisfies the last requirement.

CONCLUSION

In sum, the Alaska Trust Agreement qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. Accordingly, the Alaska Trust Agreement must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI eligibility.

This Regional Chief Counsel opinion examines whether the Secured Futures Pooled Special Needs Trust Agreement, as amended by the Sixth Alaska Amendment, qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. The opinion concludes that the trust impermissibly allows the Trustee to delegate responsibilities to a for-profit entity that must be retained by the non-profit Trustee. Therefore, the trust does not qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D.

QUESTION PRESENTED

Does the Secured Futures Pooled Special Needs Trust Agreement, as amended by the Sixth Alaska Amendment (“Secured Futures Pooled Trust”), qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D, such that the trust must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (SSI) purposes?

BRIEF ANSWER

No. The Secured Futures Pooled Trust resolves the issues identified in our May 2019 opinion. However, language used in the Master Trust Agreement impermissibly allows the Trustee to delegate responsibilities to a for-profit entity that must be retained by the non-profit Trustee.

Because the Secured Futures Pooled Trust is not a qualifying pooled trust, it must be evaluated under POMS SI 01120.201.

SUMMARY OF FACTS

Secured Futures, Inc., settled the Pooled Special Needs Trust in 2008. On August 28, 2015, it adopted a new trust agreement, amending and restating the trust (“Master Trust Agreement”). Secured Futures then amended the trust on November 2, 2016, to comply with the requirements of the State of Alaska (“Fifth Alaska Amendment”). On May 19, 2017, [trust beneficiary] M.M.’s court-appointed guardian executed a Joinder Agreement to the Secured Futures Pooled Trust (“Joinder Agreement”).

In May 2019, we opined that the Fifth Alaska Amendment contained multiple provisions that prevented the Secured Futures Pooled Trust from being a qualifying pooled trust under 42 U.S.C. § 1396p(d)(4)(C). On October 23, 2019, Secured Futures amended the trust (“Sixth Alaska Amendment”) and removed the problematic provisions. The RO asked OGC if the Secured Futures Pooled Trust, with the Sixth Alaska Amendment, is a qualifying pooled trust under 42 U.S.C. § 1396p(d)(4)(C).

ANALYSIS

A. To be a pooled trust, a trust must meet six requirements

To be eligible for SSI, the dollar value of a claimant’s countable resources cannot exceed certain statutory limits. 42 U.S.C. §§ 1382(a)(1)(B), (3)(B); 20 C.F.R. §§ 416.202(d), 416.1201, 416.1205; POMS SI 01110.003(A). Under 42 U.S.C. § 1382b(e), a trust is a resource unless it meets certain requirements, including those articulated in § 1396p(d)(4)(C). Trusts that meet the requirements of 42 U.S.C. § 1396p(d)(4)(C) are considered to be qualifying pooled trusts.^[2]

First, to be a qualifying pooled trust, the trust must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); accord POMS SI 01120.203.D.2. Second, the trust must be “established and managed by a nonprofit association.” 42 U.S.C. § 1396p(d)(4)(C)(i); accord POMS SI 01120.203.D.3. Third, the association must maintain “[a] separate account . . . for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii); accord POMS SI 01120.203.D.4. Fourth, the accounts must be “established solely for the benefit of individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.5. Fifth, the trust account must be “established . . . by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.6. Sixth, and finally, “[t]o the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State 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 plan . . . .” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.D.8.

A trust that qualifies as a pooled trust must still be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

B. The Secured Futures Pooled Trust does not qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C).

The Secured Futures Pooled Trust does not qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) because it potentially provides for an excess delegation of authority to an entity other than a non-profit association.

1. Disabled Individual

To begin, the trust must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); see also POMS SI 01120.203.D.2 (“[T]he individual whose assets were used to establish the trust account must be disabled for SSI purposes”).

This requirement is satisfied. According to the Office of the Regional Commissioner, M.M. is a disabled adult. Moreover, M.M.’s court-appointed guardian established M.M.’s sub-account using family funds. Joinder Agreement, at 1. Funds deposited on behalf of the beneficiary are “the funds of the Beneficiary.” Master Trust Agreement, Art. 1.

2. Established and Managed by a Nonprofit Association

Next, the trust must be “established and managed by a nonprofit association.” 42 U.S.C. § 1396p(d)(4)(C)(i); see also POMS SI 01120.203.D.3 (trust is “established and maintained by the actions of a nonprofit association”).

While the Trust was established by a nonprofit corporation, the Master Trust Agreement also provides that “the Trustee has the power to delegate to a corporate fiduciary the exercise of any powers, with the same effect as if the Trustee had joined in the exercise of such power.” Art. 3.3. By its plain language, the Trust permits the non-profit Trustee to delegate its powers to a corporate fiduciary without restriction, including, potentially, for-profit corporate fiduciaries. Pursuant to POMS SI 01120.225.D, a nonprofit corporation may employ a for-profit entity such as an investment advisor if the nonprofit corporation maintains ultimate managerial control over the Trust. For example, the nonprofit corporation must remain responsible for determining the amount of the trust corpus to invest, removing or replacing the trustee, and making the day-to-day decisions regarding the health and well-being of the pooled trust beneficiaries. See id.

The delegation of authority authorized by the Trust appears overly permissive; certain responsibilities cannot be delegated to a for-profit entity. Assuming that the corporate fiduciary is a for-profit entity, it raises the possibility that the delegation of authority could exceed the limits set forth in POMS SI 01120.225. For example, the delegation provision does not make clear that Secured Futures, as non-profit Trustee, must be responsible for determining the amount of the Trust corpus to invest. See POMS SI 01120.225. D.

3. Separate Accounts, Pooled for Investing

To be a pooled trust, the trust must maintain “a separate account . . . for each beneficiary of the trust.” 42 U.S.C. § 1396p(d)(4)(C)(ii). “[F]or purposes of investment and management of funds, the trust pools these accounts.” Id. However, “[t]he trust must be able to provide an individual accounting for each individual.” POMS SI 01120.203.D.4.

This requirement is satisfied. The Secured Futures Pooled Trust maintains “detailed records of all financial transactions for each Beneficiary Trust Share[,]” Master Trust Agreement, Art. 3.9, which is a sub-account containing the “distinct share or portion of [the] trust held on deposit for a disabled individual beneficiary” Id., Art. 1. Beneficiary Trust Shares are “combined [for] investment and administration, but [are] deemed the distinct share of, or for the benefit of, their respective Beneficiaries.” Master Trust Agreement, Art 2.2.

4. Established for the Sole Benefit of the Disabled Individual

The next requirement for the pooled trust exception is that the trust account is “established solely for the benefit of individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); see also POMS SI 01120.203.D.5 (trust “must be established for the sole benefit of the disabled individual”). The statute does not provide guidance on “sole benefit.” See 42 U.S.C. § 1396p(h) (setting forth definitions, but not defining this term). But the POMS explains that a trust is “established for the sole benefit of an individual” when it “benefits no one but that individual, whether 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.

An early termination provision is allowable under the pooled-trust exception so long as three criteria are met: (1) “[u]pon early termination (i.e., termination prior to the death of the beneficiary), the State(s), as primary assignee, 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);” (2) “[o]ther than payment for those expenses [for taxes, reasonable fees, and administrative expenses], no entity other than the trust beneficiary may benefit from the early termination (i.e., after reimbursement to the State(s), all remaining funds are disbursed to the trust beneficiary);” and (3) “[t]he early termination clause gives the power to terminate to someone other than the trust beneficiary.” POMS SI 01120.199.F.1 (bold in original). The trust may pay taxes, reasonable fees, and administrative expenses before reimbursing any state(s) for medical assistance. POMS SI 01120.199.F.3. The Proposed Joinder Agreement’s early termination provision meets all three criteria in POMS SI 01120.199.F.1.

An early-termination provision need not satisfy these three criteria if it solely allows for the “decanting” of a beneficiary’s assets from one pooled trust under 42 U.S.C. § 1396p(d)(4)(C) to another 42 U.S.C. § 1396p(d)(4)(C) trust. POMS SI 01120.199.F.2. However, the trust must specify that, in such a trust-to-trust transfer, the only permissible disbursements are the transfer of sub-account funds to the secondary trust and the payment of allowable administrative expenses. POMS SI 01120.199.F.2.

The Sixth Alaska Amendment’s provision governing trust termination under court order^[3] satisfies the early termination criteria of POMS SI 01120.199.F. The Amendment now provides that, if the trust share terminates prior to the beneficiary’s death upon court order, the beneficiary’s trust share is either transferred to “another recognized Medicaid trust established pursuant to 42 U.S.C. § 1396p(d)(4)(C) that is approved by the State of Alaska Department of Health and Social Services,” or is used to repay medical assistance provided by the states. Sixth Alaska Amendment, at ¶ 6 (amending Art. 6 of the Master Trust Agreement). The trust goes on to explain that “After repayment to [sic] of Medical Assistance to all states under this Paragraph, any funds remaining in the Beneficiary Trust Share shall be disbursed to the Beneficiary.” Id.

The Sixth Alaska Amendment’s decanting after-termination-by-court-order provision satisfies the criteria of POMS SI 01120.199.F.2. It specifically states that, with the exception of the payment of allowable administrative expenses, the beneficiary’s funds “shall” be placed into another 42 U.S.C. § 1396p(d)(4)(C) trust. Sixth Alaska Amendment, at ¶ 6 (amending Art. 6 of the Master Trust Agreement).

The trust also contains two early termination provisions that govern when the trust is terminated early without a court order: a second decanting provision, Master Trust Agreement, Art. 7, 9.1, and an early termination with distribution provision, Id. at Art. 9.2. Neither violates the sole benefit requirement.

The first of the trust’s provisions governing early termination without a court order – another decanting provision – satisfies the criteria of POMS SI 01120.199.F.2. See Master Trust Agreement, Art. 7, 9.1. The trust specifies that a “transfer under this Article shall not result in any disbursement other than the” transfer of funds to a qualifying trust, and allowable administrative expenses.^[4] Master Trust Agreement, Art. 7.2.

The second of the trust’s provisions governing early termination without a court order satisfies the criteria of POMS SI 01120.199.F.1. First, the trust provides that, upon early termination, the trustee “shall first repay the Medical Assistance paid by all states . . . after allowable administrative expenses and taxes are paid.” Master Trust Agreement, Art. 9.2. Second, the trust provides that, after the repayment of medical assistance to the states and allowable taxes and administrative fees, “the balance of the Beneficiary Trust Share shall be distributed to the Beneficiary.” Id. Third, the beneficiary does not have the power to terminate the Trust. Master Trust Agreement, Art. 7.1, 9.1.

Otherwise, the Secured Futures Pooled Trust satisfies the sole benefit requirement. The Master Trust Agreement provides that the Trust is “solely for the benefit of the Beneficiaries.” Master Trust Agreement, at 2; see also Master Trust Policies and Procedures, at 1 (“funds disbursed must be for the sole benefit of the beneficiary.” The Agreement also states the sub-account assets must be used for the “Beneficiary’s Supplemental Needs,” Master Trust Agreement, Art. 6.2, which benefit the beneficiary, Id., Art. 1.

5. Established Through the Actions of the Individual, Parent, Grandparent, Legal Guardian, or Court

To qualify as a pooled trust, the trust account must be “established . . . by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.6.

F.C. executed the Joinder Agreement as M.M’s court-appointed guardian. Joinder Agreement, at 1, 3. The Secured Futures Pooled Trust thus meets the fifth requirement.

6. Remaining Amounts Paid to the State

Lastly, “[t]o the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State 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 plan.” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.D.8. The trust may, however, retain funds, pay taxes due, as well as charge reasonable fees for the administration of the trust before repaying the States for medical assistance provided. POMS SI 01120.203.D.8, E.1.

The Secured Futures Pooled Trust satisfies this requirement. Specifically, the Master Trust Agreement provides that, “[u]pon the death of the Beneficiary, any amounts that are not retained by the trust and that were the funds of the beneficiary prior to the establishment of the trust share, shall first repay the Medical Assistance paid by all states on behalf of the Beneficiary . . . after allowable administrative expenses and taxes are paid.” Master Trust Agreement, Art. 6.12 (emphasis in original). The trust’s allowance for retaining funds, and payment of taxes and reasonable fees for the administration of the trust estate before repayment to the States for medical assistance is consistent with the requirements of 42 U.S.C. § 1396p(d)(4)(C)(iv).

CONCLUSION

The Secured Futures Pooled Trust does not qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C). The trust provides that the Trustee can delegate to a potentially for-profit corporate fiduciary any powers, which conflicts with the requirement that the non-profit Trustee must retain certain types of authority. Accordingly, the Secured Futures Pooled Trust must be evaluated under POMS SI 01120.201.

This Regional Chief Counsel (RCC) opinion examines whether cash stock dividends in excess of $2,000 from two ANCSA corporations are income, even if claimed to be irrevocably assigned to a qualifying section 1917(d)(4)(A) special needs trust. The RCC concludes that cash stock dividends from the two ANCSA corporations are legally unassignable. Therefore, the funds cannot be irrevocably assigned to a section 1917(d)(4)(A) trust, and dividends in excess of $2,000 remain income for SSI purposes.

Questions Presented

Are cash stock dividends in excess of $2,000 from ANCSA corporations Cook Inlet Region, Inc. (CIRI) and Seldovia Native Association, Inc. (SNAI) income for SSI purposes, even if a claimant represents^[5] they are irrevocably assigned to a section 1917(d)(4)(A)^[6] trust?

BRIEF ANSWER

Yes. The stock dividends from CIRI and SNAI are legally unassignable. Thus, they cannot be (irrevocably) assigned to a section 1917(d)(4)(A) trust. They remain income for SSI purposes.

SUMMARY OF FACTS

We understand that some SSI recipients receiving stock dividends from ANCSA corporations direct dividends in excess of $2,000 into section 1917(d)(4)(A) trusts to prevent those funds from counting as income for SSI purposes. We are aware of at least one final administrative decision in which the agency found that ANCSA corporation stock dividends from CIRI and SNAI were not income for SSI purposes.

ANALYSIS

A. Only the first $2,000 in stock dividends issued from ANCSA corporations are excluded from income determinations.

For purposes of determining SSI eligibility or benefit amount, dividends are generally income. 42 U.S.C. § 1382a(a)(2)(F). However, since 1988, Congress has excluded the first $2,000 in dividends received from an ANCSA corporation from being considered income for SSI purposes. Alaska Native Claims Settlement Act Amendments of 1987, Pub L. No. 100-241, 101 Stat. 1788, § 15 (1988) (codified as amended at 43 U.S.C. § 1626(c)).

The regulations state, “[s]ome Federal laws other than the Social Security Act provide that we cannot count some of your unearned income for SSI purposes. We list the laws and the exclusions in the appendix to this subpart which we update periodically.” 20 C.F.R. § 416.1124(b). That appendix lists as excluded from income counting “[d]istributions received by an individual Alaska Native or descendent of an Alaska Native from an Alaska Native Regional and Village Corporation pursuant to the Alaska Native Claims Settlement Act, as follows: cash, including cash dividends on stock received from a Native Corporation, to the extent that it does not, in the aggregate, exceed $2,000 per individual each year[.]” 20 C.F.R. Pt. 416, Subpt. K, App. (IV)(a)(3).

In 2017, Senators Murkowski and Sullivan introduced a bill to increase the dividend exclusion from $2,000 to $5,000, but it was not enacted into law. See ANCSA Dividend Exclusion Act of 2017, S. 1494, 115th Cong. Accordingly, ANCSA corporation dividends in excess of $2,000, per individual per year, are income for purposes of determining SSI eligibility and payment amount, unless excluded by another provision. 20 C.F.R. Pt. 416, Subpt. K, App. (IV)(a)(3); POMS SI SEA 00830.830.B. We do not believe that there is an income exclusion that would apply to the excess dividend payments.

B. The dividend payments are not assignable by law; and, so, the excess dividend payments are income to the claimant.

The POMS states at SI 01120.200(G)(1)(c), in the context where the trust principal is not countable as a resource:

Certain payments are non-assignable by law; therefore, are income to the individual entitled or eligible to receive the payments under regular SSI income rules, unless an exception applies. Although a trust may be structured such that it appears that non-assignable payments are made directly into the trust, non-assignable payments may not be made directly into a trust, to avoid income counting or for any other reason.

Similarly, the POMS states at SI 01120.201(J)(1)(c) and (f), again in the context where the trust principal is not countable as a resource:

Certain payments are not assignable by law and, therefore, are income to the individual entitled or eligible to receive the payments under regular SSI income rules, unless an exception applies. Although a trust may be structured such that it appears that non-assignable payments are made directly into the trust, non-assignable payments may not be made directly into a trust to try to avoid income counting or for any other reason. . .

Although an individual cannot assign a non-assignable payment to a trust, he or she may have a payment direct deposited into the trust. Such an arrangement means that the payment is still income to the person entitled or eligible to receive it.

Accordingly, the public guardian is incorrect in his “belie[f] [that] Social Security errs in not considering [the claimant’s] Medicaid qualifying trust as the recipient of distributions from her native corporations that are in excess of the $2,000 exclusion.” March 22, 2017 Letter. Similarly, the public guardian is incorrect in his argument that the excess distributions “are excludable because they are received directly into a qualifying irrevocable asset trust . . . , causing the payments to be neither income nor [a] resource to the claimant.” May 2, 2017 Letter.^[7]

Here, the dividend payments are not assignable by law. Therefore, the excess dividend payments are countable as income to the claimant, to whom they are due.

Federal law prohibits the assignment of stock dividends from ANCSA corporations unless the corporation has amended its articles of incorporation to allow for their assignment. 43 U.S.C. §§ 1606(h)(1)(B)(iv), 1607(c), 1629c; see Pub L. No. 100-241, § 2(6) (explaining that 43 U.S.C. § 1629c gives “shareholders of each Native corporation” the ability to decide “when restrictions on alienation of stock issued as part of the settlement should be terminated”).

Neither CIRI nor SNAI has removed the statutory bar on assigning its stock dividends under the procedures outlined in 43 U.S.C. § 1629c.

CIRI shareholders have not removed the restrictions on assignment of dividends provided for in 43 U.S.C. § 1606(h)(1)(B)(iv). CIRI Shareholder Handbook, at 16-17, https://www.ciri.com/wp-content/uploads/2016/09/SH-Handbook-2016.pdf (last visited December 20, 2019). The most recent amendment to the articles of incorporation was filed with the state of Alaska on March 15, 1991, and does not terminate the alienability restrictions on stock dividends pursuant to 43 U.S.C. § 1629c.^[8] Articles of Amendment to the Articles of Incorporation of Cook Inlet Region, Inc., https://www.commerce.alaska.gov/cbp/main/Search/Entities(providing search box that can be used to view documents filed by CIRI with the Commissioner of Commerce and Economic Development) (last visited December 20, 2019).

SNAI was incorporated in 1972, and has not filed any amendments to its articles of incorporation to opt-out of the restrictions on assignment of dividends provided for in 43 U.S.C. § 1606(h)(1)(B)(iv). Summary of Documents Filed by SNAI with Alaska’s Commissioner of Commerce and Economic Development, https://www.commerce.alaska.gov/cbp/main/Search/Entities (providing search box that can be used to view documents filed by SNAI with the Commissioner of Commerce and Economic Development) (last visited December 20, 2019); see 43 U.S.C. § 1607(c) (providing that the restraint on alienation at 43 U.S.C. § 1606(h) applies to village ANSCA corporations).

Because neither CIRI nor SNAI has amended its articles of incorporation to remove the statutory bar on assigning stock dividends pursuant to 43 U.S.C. § 1629c, stockholders are statutorily prohibited from assigning stock dividends paid by these corporations to section 1917(d)(4)(A) trusts. Stock dividends from these corporations in excess of $2,000 per year are income for purposes of SSI.

CONCLUSION

Stock dividends from CIRI and SNAI are legally unassignable. Thus, they cannot be assigned to a section 1917(d)(4)(A) trust. There is no income exclusion that applies with respect to the excess dividends. Stock dividends in excess of $2,000 from CIRI and SNAI remain income for SSI purposes.

This Regional Chief Counsel (RCC) opinion examines whether a pooled trust sub-account qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. The RCC concludes that it does and therefore must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (SSI) purposes.

QUESTION PRESENTED

Does the J~ Irrevocable Pooled Asset Trust, First Restatement (“J~ Trust”), qualify as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D, such that the trust must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (“SSI”) purposes?

BRIEF ANSWER

Yes, the J~ Trust qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. Because the J~ Trust is a qualifying pooled trust, it must be evaluated under POMS SI 01120.200 to determine if it is a countable resource.

SUMMARY OF FACTS

On April XX, 2019, J~’s court appointed guardian, V~, Public Guardian for the Office of Public Advocacy (OPA), executed the First Restatement of the J~ Trust. J~ Trust, at 18. OPA settled and is Trustee of the J~ Trust. J~ Trust, §§ 1.01 – 1.02. The trust was originally settled on August XX, 2017, and was restated in 2019 to comply with Social Security requirements. J~ Trust, § 1.01. The J~ Trust was created with the purpose of qualifying as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C). J~ Trust, § 3.01.

ANALYSIS

A. To be a qualifying pooled trust, a trust must meet six requirements.

To be eligible for SSI, the dollar value of a claimant’s countable resources cannot exceed certain statutory limits. 42 U.S.C. § 1382(a)(1)(B) & (3)(B); 20 C.F.R. §§ 416.202(d), 416.1201, 416.1205; POMS SI 01110.003(A). Under 42 U.S.C. § 1382b(e), a trust is a resource unless it meets certain requirements, including those articulated in § 1396p(d)(4)(C). Trusts that meet the requirements of 42 U.S.C. § 1396p(d)(4)(C) are considered to be qualifying pooled trusts.^[9]

First, to be a qualifying pooled trust, the trust must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); accord POMS SI 01120.203.D.2. Second, the trust must be “established and managed by a nonprofit association.” 42 U.S.C. § 1396p(d)(4)(C)(i); accord POMS SI 01120.203.D.3. Third, the association must maintain “[a] separate account . . . for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts.” 42 U.S.C. § 1396p(d)(4)(C)(ii); accord POMS SI 01120.203.D.4. Fourth, the accounts must be “established solely for the benefit of the individuals who are disabled.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.5. Fifth, the trust account must be “established . . . by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.” 42 U.S.C. § 1396p(d)(4)(C)(iii); accord POMS SI 01120.203.D.6. Sixth, and finally, “[t]o the extent that amounts remaining in the beneficiary’s account upon the death of the beneficiary are not retained by the trust, the trust pays to the State 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 plan . . ..” 42 U.S.C. § 1396p(d)(4)(C)(iv); accord POMS SI 01120.203.D.8.

A trust that qualifies as a pooled trust must still be evaluated under POMS SI 01120.200 to determine if it is a countable resource for SSI purposes.

B. The J~ Trust qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C).

This Regional Chief Counsel (RCC) opinion examines whether the amended version of a pooled trust agreement qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D. The RCC concludes that it does not qualify because of the reasons listed in the 'Brief Answer' section of the opinion. Therefore, the trust must be evaluated under POMS SI 01120.201 to determine if it is a countable resource for Supplemental Security Income (SSI) purposes.

This Regional Chief Counsel (RCC) opinion examines whether the revised language of the proposed joinder agreement to a pooled trust would qualify that trust as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and POMS SI 01120.203.D, such that the trust must be evaluated under POMS SI 01120.200 to determine if it is a countable resource for Supplemental Security Income (SSI) purposes.

The RCC concludes that the proposed joinder agreement resolves the issue identified in our December 2018 opinion. Therefore, the trust would qualify as a pooled trust and be evaluated under POMS SI 01120.200 to determine if it is a countable resource.

The Regional Chief Counsel (RCC) opinion examines whether Sections 4.02(d), 4.03(c), and 4.03(e) of the M~ Irrevocable Asset Trust (the Trust) meet the special needs trust requirements so that the Trust may be excluded from resources for Supplemental Security Income (SSI) eligibility. It was concluded that the provisions at issue allow Trust resource allocation in a manner that does not comply with statute. Accordingly, a trust with this language does not satisfy the special needs trust requirements.

QUESTION PRESENTED

Whether Sections 4.02(d), 4.03(c), and 4.03(e) of the M~ Irrevocable Asset Trust (the Trust) meet the special needs trust requirements so that the Trust may be excluded from resources for Supplemental Security Income (SSI) eligibility?

BRIEF ANSWER

No. The Trust provisions violate the “sole benefit” and Medicaid payback requirements.

SUMMARY OF FACTS

Alaska’s Office of Public Advocacy established the Trust for the benefit of M~, a disabled resident of Alaska under the age of 65. It is our understanding that M~ has died; however, CDPS has several trusts with identical language. Therefore, you asked us to analyze these potentially problematic trust provisions. Accordingly, this legal opinion addresses issues with these specific sections and not the validity of the Trust as a whole.

ANALYSIS

Relevant Authority

Special needs trusts can be excluded as resources for SSI eligibility only if they meet several conditions. See 42 U.S.C. § 1396p(d)(4)(A); POMS SI 01120.203(B)(1). Among these conditions is a requirement that the trust be established for the “sole benefit” of the disabled individual; a second condition is that, upon the death of the individual, all funds remaining in the trust must first be used to reimburse the State for all Medicaid payments “up to an amount equal to the total medical assistance paid.” 42 U.S.C. § 1396p(d)(4)(A); POMS SI 01120.203(B)(1). Termination of a special needs trust before the beneficiary’s death is allowed only when, among other criteria: at the time of termination, the State is reimbursed for the medical assistance costs under the State Medicaid plan(s), and any remaining funds are distributed to the trust beneficiary. POMS SI 01120.199(F)(1).

The Trust provisions violate the “sole benefit” and Medicaid payback requirements.

You asked us to analyze three clauses in the Trust: Sections 4.02(d), 4.03(c) and 4.03(e).

Sections 4.02(d) and 4.03(c)

Section 4.02(d) allows Trust termination and distribution pursuant to court order: “In the event this Trust is terminated by a court of law, the undistributed balance at the date of termination shall be distributed, free of Trust, in accordance with orders of the court.” Section 4.02(d).

Section 4.03(c) specifies that the Trustee will distribute assets pursuant to the court’s instructions, and in the absence of such instructions, it will give priority to the State’s Medicaid program:

Should this Trust be terminated by decree of an Alaska or other court, the Trustee shall distribute the residue in accordance with the court’s instructions; and in the absence of explicit court order to the contrary, the Trustee shall distribute the residue of the Trust as follows (subject to the exception in paragraph (e) below): to the extent Alaska’s Medicaid program (or the Medicaid program of another state) has expended funds on Beneficiary’s behalf, the Trustee is directed to reimburse the Alaska Medicaid (or other state) program for such expenditures in proportion to Medicaid benefits paid by each state. The Trustee is directed to deliver any then-existing residue as ordered by the court.

Section 4.03(c).

Sections 4.02(d) and 4.03(c) violate the “sole benefit” requirement because both allow the court discretion in distributing the trust residue. Qualifying special needs trusts must be established for the sole benefit of the disabled individual, and not any other individuals or entities. 42 U.S.C. § 1396p(d)(4)(A); POMS SI 01120.203(B)(1)(e). By allowing the Trustee to distribute the balance of the Trust pursuant to court order, Sections 4.02(d) and 4.03(c) could allow distribution to a third party during the beneficiary’s life. Therefore, these provisions violate the special needs trust requirements.

Furthermore, sections 4.02(d) and 4.03(c) violate the Medicaid payback requirement by allowing the Trust to be distributed early pursuant to court order without specifying that the State must receive all Trust assets up to the total amount of medical assistance paid. See POMS SI 01120.203(B)(1)(h); cf. 42 U.S.C. § 1396p(d)(4)(A). In fact, Section 4.03(c) envisions a court-ordered distribution scheme, and it requires payment to the State “in the absence of explicit court order to the contrary.” Section 4.03(c). Sections 4.02(d) and 4.03(c) are thus too broad, allowing deviation from the Medicaid payback requirement.

Section 4.03(e)

Section 4.03(e) allows “advance payment” of the assets

At the request of, or with the consent of, Alaska’s (or other state’s) Division of Public or Medical Assistance, or its successor, the Trustee may make advance payments to the State of Alaska (or another state) on the obligation under paragraph 4.03(c) above to use any remaining post-termination Trust monies to reimburse it for Medicaid expenditures made for the Beneficiary during this Trust’s existence. The Trustee may do this by disbursing the accumulated income in the Trust to Alaska’s (or other state’s) Division of Public or Medical Assistance at such times and in such amounts as the Trustee, in the Trustee’s sole discretion deems advisable. Such disbursements are to be credited against the trust’s post-termination payment obligation under paragraph 4.03(c) above. At the request of, or with the consent of, Alaska’s (or other state’s) Division of Public or Medical Assistance, the Trustee may make such advance payments in the form of disbursements directly to Beneficiary’s medical providers to reduce the Medicaid expenditures Alaska’s (or other state’s) Division of Public or Medical Assistance pays for the Beneficiary, but only after receiving adequate assurances from the appropriate public or Medical Assistance staff that such disbursements will not affect the Beneficiary’s Medicaid eligibility for the remaining expenses.

Section 4.03(e).

The purpose and wording of Section 4.03(e) is not entirely clear. Regardless, this section violates the special needs trust requirements for multiple reasons.^[15] As discussed above, Section 4.03(c) violates the sole-benefit and Medicaid-payback rules. Therefore, as an initial matter, if paragraph 4.03(c) were removed from the Trust, then paragraph 4.03(e), which pertains to the obligation under paragraph 4.03(c), would also have to be removed.

Furthermore, Section 4.03(e) appears to authorize the Trustee to satisfy the Medicaid repayment obligation that attaches upon termination by making “advance payments” prior to termination. Such payments are inconsistent with the sole-benefit rule. If the payments are “to reduce the Medicaid expenditures . . . pa[id] for the Beneficiary,” as the paragraph indicates, then the payments might not work to the benefit of the beneficiary. Instead, it would be preferable for the beneficiary if Medicaid covered the expenses and the Trust funds remained available for the beneficiary’s use prior to termination.

Finally, we consulted with the Office of Program Law, who contacted policy components, regarding Section 403(e)’s allowance of “advance payments.” In their opinion, these payments may violate the Medicaid payback requirement. The obligation to repay any State cannot be determined until the Trust beneficiary dies or the Trust is terminated early prior to death. Advance payment of tentative repayment obligations does not consider that other States may be entitled to repayment in the future based on providing Medicaid services. Therefore, the advance payments made to State A may not be proportional to the obligation to pay State B. Hypothetically, State A could be repaid completely while there may be no money remaining to repay State B. The fact that the sole discretion as to amounts of payments and to whom rests with the Trustee is also contrary to the preference for proportional reimbursement.

Based on these issues, Section 403(e) also violates the sole-benefit and Medicaid-payback requirements.

CONCLUSION

The provisions at issue allow Trust resource allocation in a manner that does not comply with statute. Accordingly, a trust with this language does not satisfy the special needs trust requirements.

The grantor trust rule provides that a trust is revocable if the grantor of the trust is the sole beneficiary. In this case, the SSI recipient is both the grantor and the beneficiary. Therefore, the trust is revocable.

However, since the trust consists of dividends from stock in a Native Corporation, the Alaska Native Settlement Claims Act (ANSCA) applies and up to $2,000 per year from the Native Corporation is excluded from resources. (See POMS instructions at SI 00830.830 and Seattle regional instructions at SI SEA00830.830 regarding ANCSA.)

You have requested a legal opinion regarding the "Tim L~ Irrevocable Trust" (hereafter "Trust") to determine whether this trust document is revocable. You have specifically asked whether the beneficiary of the trust would be considered the grantor.

FACTUAL BACKGROUND

The Trust names Goldbelt, Inc., a Native Village Corporation established pursuant to the Alaska Native Claims Settlement Act (ANCSA), Pub. L. 92-203, codified at 43 U.S.C. § 1601 et seq., as the settlor of the Trust. Goldbelt, Inc. established the Trust on July 19, 1994 with dividends otherwise payable to the beneficiary of the Trust, Tim L~. Article II of the Trust names the State of Alaska's Office of Public Advocacy, Tim L~'s court-appointed full guardian, as the trustee. Trust, at p.1.

Article III of the Trust provides that "[t]he corpus of this Irrevocable Trust consists of monies which would otherwise be paid by Goldbelt, Inc. as dividends to Tim L~ by virtue of his ownership, pursuant to federal and state law, of 100 shares of stock in Goldbelt, Inc." Trust, at pp. 1-2. Section 4.01(a) of Article IV of the Trust provides that the trustee may not make any payments for L~'s ongoing support and maintenance and that L~ may not specify, control or direct any payments. Trust, at p. 2. Section 4.02(b) of Article IV of the Trust provides that "[n]o part of the Trust corpus created herein shall be used to supplant or replace public assistance benefits, if any, in the form of cash, services, or otherwise, available from any state, federal, or other governmental agency." Trust, at p. 4.

Section 4.03(a) of Article IV of the Trust provides that the Trust will terminate upon the earliest of the following events: distribution of all of the corpus, L~'s death, or entry of a judgment terminating the Trust after petition of the trustee because the Trust has rendered L~ ineligible for a public benefit. Trust, at p. 6. Section 4.03(d) governs termination of the trust due to L~'s death. In that situation, the trustee is directed to pay expenses for the efficient administration and termination of the Trust and then to pay Alaska's Division of Medical Assistance to reimburse it for Medicaid benefits paid on L~'s behalf during the Trust's existence. The Trust then directs that if there is any balance remaining in the Trust, the trustee is to pay it in accordance with L~'s last will and testament or in accordance with the laws of intestate succession if they apply. Trust, at pp. 6-7.

ISSUE PRESENTED

Your question is whether the beneficiary of the Trust, Tim L~, is also the grantor, thereby making the Trust revocable.

DISCUSSION

The Social Security Administration considers property an available resource if an individual has the right, authority or power to liquidate it. 20 C.F.R. §416.1201(a)(1) (1997). See also POMS SI 01120.200(D)(1).

The general rule is that a trust is established by the person who provides the consideration for the trust for which he is beneficiary even though in form, the trust is created by someone else. Restatement (Second) of Trusts, § 156, comment f (1959). Alaska follows the Restatement (Second) of Trusts. See e.g., Aiello v. Clark, 680 P.2d 1162 (Alaska 1984). Because the trust has been established by money which represents dividends on shares of stock owned by Mr. L~, it can be said that L~ provided the consideration for the trust.

The grantor trust rule provides that a grantor may revoke a trust if he is the sole beneficiary even if the trust is labeled "irrevocable." Am.Jur.2d Trusts, § 96. See Hal v. Malstrom, 29 Wn.2d 746, 189 P.2d 471 (1948). If the trust remainder vests immediately in a specifically named person, the trust is not revocable. See Lucas v. Velikanje, 2 Wash.App. 888, 471 P.2d 103 (1970). See also Restatement (Second) of Trusts, § 112 (1959). While we could not find any Alaska cases directly on point, an Alaska court would most likely follow the above rules as they are longstanding principles of trust law.

Under the grantor trust rule, the Trust would be revocable. However, because the trust corpus consists of dividends from stock in a Native Corporation, the Alaska Native Settlement Claims Act (ANSCA), 43 U.S.C. § 1601 et seq. applies.

ANSCA was enacted to provide a "fair and just settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land claims..." 43 U.S.C. § 1601(a). It provides for the formation of Native Corporations which issue 100 shares of stock to each Native living in a Corporation's region. 43 U.S.C. § 1606(g).

43 U.S.C. § 1626(c) specifically addresses the interplay of ANCSA and the Social Security Act. The statute states in pertinent part:

In determining the eligibility of ...an individual Native ... to—-

...(2) receive aid, assistance, or benefits, based on need, under the Social Security Act [42 U.S.C. § 301 et seq.], ...

none of the following received from a Native Corporation, shall be considered or taken into account as an asset or resource:

(A) cash (including cash dividends on stock received from a Native Corporation) to the extent that it does not, in the aggregate, exceed $2,000 per individual per annum;

Given the direct applicability of the above federal statute, the first issue to analyze would be whether the Trust receives over $2,000 per year in dividend monies from the Native Corporation. Under the above statute, up to $2,000 per year cannot be counted as a resource. Under the grantor trust rules, any dividends received by the Trust above $2,000 per year could be counted. The Trust does not specifically name a remainder beneficiary. Regarding the issue of a specifically named remainder beneficiary, see also our previous opinion regarding the Jeannette B~ Living Trust, the Surrana G~ Trust, and the H~ Family Trust, dated October 21, 1996.

CONCLUSION

Under 43 U.S.C. § 1626(c), up to $2,000 per year of dividends on stock in a Native Corporation may not be counted as a resource for SSI eligibility purposes. L~ is the grantor of the trust because he has provided the consideration for the Trust. He owns stock in a Native Corporation by virtue of ANCSA. His shares of stock and the dividends received therefrom are analogous to settlement proceeds. He received the stock by virtue of his loss of claim to aboriginal lands. Because the Trust does not specifically name a remainder beneficiary, the grantor trust rule would apply to any annual dividends over $2,000.