This Regional Chief Counsel opinion provides the State laws on trusts established with no funds (i.e., dry or empty trusts) for the states in Region IV, to help field offices address how to consider such purported trusts under the agency's Supplemental Security Income (SSI) resource rules.

QUESTION

You asked us to provide the laws for the states in Region IV, related to trusts established with no funds (i.e., dry or empty trusts), to help field offices address how to consider such purported trusts under the agency’s Supplemental Security Income (SSI) resource rules.

BACKGROUND

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See Social Security Act (Act) §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2017).^[1] The Act does not define “resources” and provides only a list of certain items excluded in determining the resources of an individual. See Act § 1613(a). However, Congress empowered the Commissioner to promulgate rules and regulations to establish the right to SSI payments. See Act §§ 205(a), 1631(d)(1). Pursuant to that authority, the Commissioner has clarified that resources include “any real or personal property interest that an individual . . . owns and could convert to cash to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a); see Program Operations Manual System (POMS) SI 01110.100.B.1; POMS SI 01120.010.B. “If the individual has the right, authority or power to liquidate the property or his or her share of the property, it is considered a resource. If a property right cannot be liquidated, the property will not be considered a resource of the individual . . . .” 20 C.F.R. § 416.1201(a)(1); see POMS SI 01110.100.B.1, B.3; POMS SI 01110.115.A; POMS SI 01120.010.B. Even if property has no current market value, it may still be considered a resource if it is property that an individual owns and has the right to convert to cash and the individual is not legally restricted from using the property for his or her support and maintenance. See POMS SI 01110.100.B.2, B.3.

Property held in a trust may or may not be considered a resource for SSI purposes. See Act § 1613(e); POMS SI 01120.200.A.1. Generally, the agency must consider the principal or corpus of a trust established with the assets of an individual to be a resource of the individual. See Act § 1613(e)(1)-(3); POMS SI 01120.201.A.1. Trust principal is a countable resource if the individual (claimant, recipient, deemer) has legal authority to revoke or terminate the trust and use the funds to meet his or her food or shelter needs, or if the individual can direct the use of the trust principal for his or her support and maintenance under the terms of the trust. See POMS SI 01120.200.D.1.a. Also, if an individual can sell his or her beneficial interest in the trust, that interest is a resource. See POMS SI 01120.200.D.1.a. Conversely, if an individual does not have legal authority to revoke or terminate the trust or to direct the use of the trust assets for his or her own support and maintenance, the trust principal is not a resource for SSI purposes. See POMS SI 01120.200.D.2. The revocability of a trust and the ability to direct the use of trust principal depends on the terms in the trust agreement and on state law. See POMS SI 01120.200.D.2.

DISCUSSION

Alabama:

Alabama statutes indicate that a trust may be established through the conveyance of property, but do not otherwise explain the property requirements to establish a trust. See Ala. Code §§ 19-3B-401, 19-3B-402 (2018). Alabama case law indicates the existence of property held by a trustee for the benefit of a trust is an essential element of a trust. SeeCorretti v. First Nat’l Bank of Birmingham, 276 So. 2d 141, 147 (Ala. 1973); Gordon v. Central Park Little Boys League, 119 So. 2d 23, 27 (Ala. 1960). Alabama’s trust code defines “property” generally as “anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.” See Ala. Code § 19-3B-103(13). Alabama’s statutes regarding wills and estates, however, appear to recognize at least some unfunded trusts by describing situations in which a will may validly transfer property to a trustee of a trust. See Ala. Code Ann. § 43-8-140. Specifically, Ala. Code § 43-8-140 indicates a will may validly transfer property to the trustee of, among other types of trusts, an “unfunded life insurance trust,” and a trust identified in a will, where the terms of the trust are set forth in a written instrument other than a will, “regardless of the existence, size, or character of the corpus of the trust.” Thus, Alabama law appears to recognize a trust may be established with no funds under certain situations.

Florida:

Florida’s trust statutes indicate a trust may be created when property or a property interest is transferred to a trustee, but do not further explain the property requirements to establish a trust. See Fla. Stat. Ann. §§ 736.0401, 736.0402 (West 2018); see also Fla. Stat. Ann. § 736.0103(15) (West 2017) (defining “property” as “anything that may be the subject of ownership, real or personal, legal or equitable, or any interest therein”). Florida case law, however, indicates a trust is not created until property is conveyed for the purpose of the trust. SeeVaughan v. Boerckel, 963 So.2d 915, 920 (Fla. Dist. Ct. App. 2007) (noting a corpus is essential to a valid trust in holding an express trust cannot exist unless there is a transfer of legal ownership in the subject property); McLemore v. McLemore, 675 So. 2d 202, 205 (Fla. Dist. Ct. App. 1996). Thus, Florida does not appear to recognize dry or empty trusts.^[2]

Georgia:

Georgia statutes, which recognize two types of trusts, express and implied,^[3] require express trusts to include trust property, and presume implied trusts include trust property. See Ga. Code Ann. §§ 53-12-2(3), (5); 53-12-20(b)(2); 53-12-130; 53-12-132 (West 2018); see also Ga. Code Ann. § 53-12-20(9) (West 2018) (defining property as “any type of property, whether real or personal, tangible or intangible, legal or equitable”). Georgia case law also holds that an essential element of an express trust is the existence of trust property. SeeHayes v. Clark, 530 S.E.2d 38, 39 (Ga. Ct. App. 2000); Lummus Supply Co. v. Fidelity Fed. Sav. & Loan Ass’n, 234 S.E.2d 671, 672 (Ga. Ct. App. 1977). Georgia’s statutes regarding wills and estates, however, appear to recognize at least some unfunded trusts by describing situations in which a will may validly transfer property to a trustee of a trust. See Ga. Code Ann. § 53-12-101(a). Specifically, Ga. Code Ann. § 53-12-101(a) indicates a will may validly transfer property to the trustee of, among other types of trusts, an “unfunded life insurance trust,” and a trust identified in a will, where the terms of the trust are set forth in a written instrument other than a will, “regardless of the existence, size, or character of the corpus of the trust.” Thus, Georgia law appears to recognize a trust may be established with no funds under certain situations.

Kentucky:

Under the Kentucky statutes’ chapter on trusts, one may create a trust by transferring property to a trustee or by a property owner’s declaration that the owner holds identifiable property as trustee, but the chapter does not further explain the property requirements to establish a trust. See Ky. Rev. Stat. Ann. § 386B.4-010 (West 2017); see alsoKy. Rev. Stat. Ann. § 386B.1-010(12) (West 2017) (defining property as “anything that may be the subject of ownership, whether legal or equitable, or any interest therein”). Kentucky’s statutes regarding wills and estates, however, appear to recognize at least some unfunded trusts by describing situations where a will may validly transfer property to a trustee. SeeKy. Rev. Stat. Ann. § 394.076 (West 2017). Specifically, Ky. Rev. Stat. Ann. § 394.076 indicates a will may validly transfer property to the trustee of, among other types of trusts, an “unfunded life insurance trust,” and a trust identified in a will, where its terms are set forth in a written instrument other than a will, “regardless of the existence, size, or character of the corpus of the trust.” The Supreme Court of Kentucky has recognized that a dry trust is a valid trust pursuant to Ky. Rev. Stat. Ann. § 394.076 and Kentucky’s adoption of the Uniform Testamentary Additions to Trust Act. SeeCummings v. Pitman, 239 S.W. 3d 77, 84 (Ky. 2007) (finding trust existed at the time trust instrument was executed, despite the fact that the trust did not contain assets until settlor’s death, one year after the trust instrument was executed). Thus, Kentucky law does recognize a trust may be established with no funds under certain situations.

Mississippi:

Under the Family Trust Preservation Act of 1998, Mississippi statutes define trusts to mean an express trust, private or charitable, or a trust created or determined by a judgment or decree under which the trust is to be administered in the manner of an express trust. See Miss. Code Ann. § 91-9-501(a) (West 2017). Mississippi statutes do not appear to contain any additional explanation regarding any property requirements to establish a trust. Furthermore, Mississippi case law does not appear to address whether there are property requirements to establish a trust. Cases that describe the essentials of an express trust do not address this question. See, e.g., Sligh v. First Nat’l Bank of Holmes Cty., 735 So. 2d 963, 974 (Miss. 1999); Ogle v. Durley, 77 So. 2d 688, 691-92 (Miss. 1955); Smiley v. Yllander, 105 So. 3d 1171, 1175 (Miss. Ct. App. 2012). Thus, we found no Mississippi statute or case law recognizing or prohibiting the establishment of a trust with no funds.

North Carolina:

North Carolina statutes identify a number of requirements to create a trust, and indicates a trust may be established when property is transferred to or held by a trustee, but do not describe any particular property requirements to establish a trust. See N.C. Gen. Stat. Ann. §§ 36C-4-401, 36C-4-402 (West 2017); see also N.C. Gen. Stat. Ann. § 36C-1-103(14) (defining property as “[a]nything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein”). North Carolina’s trust code includes a provision on trusts based on life insurance or death benefit interests, which indicates an unfunded trust is valid where the trust is a designated beneficiary of a life insurance policy or retirement benefits. See N.C. Gen. Stat. Ann. § 36C-4-401.1, comment (West 2017). North Carolina statutes on testamentary additions to trusts also indicate a will may devise property to a trustee of a trust that is established at the testator’s death, if the trust is identified in the will and its terms are described in a written instrument executed before or concurrently with the execution of the will, “regardless of the existence, size, or character of the corpus of the trust during the testator’s lifetime.” N.C. Gen. Stat. Ann. § 31-47(a)(2). These statutory provisions indicate North Carolina does recognize that a trust may be established with no funds under certain situations.

South Carolina:

South Carolina statutes indicate that a trust may be established when property is transferred to a trustee or through a written, signed declaration from an owner of property that the owner is holding the property as a trustee, but does not further explain the property requirements to establish a trust. See S.C. Code Ann. § 62-7-401 (2017). South Carolina case law indicates that a trust generally can exist only if it is funded. SeePatterson v. Witter, 791 S.E.2d 294, 301 (S.C. Ct. App. 2016) (listing trust corpus as a necessary element to establish existence of a trust); Mayer v. M.S. Bailey & Son, 555 S.E.2d 406, 410 (S.C. Ct. App. 2001) (noting a trust generally can exist only if it is funded). South Carolina’s trust code defines “property” generally as “anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein,” including interests created through beneficiary designations in insurance policies, financial instruments, deferred compensation, and other retirement arrangements. S.C. Code Ann. § 62-7-103(11), comment. Thus, although South Carolina defines “property” to broadly include interests in retirement arrangements and other financial instruments or policies, South Carolina law does not appear to recognize a trust that is established with no property.

Tennessee:

Tennessee’s Uniform Trust Code identifies the requirements for creating a trust, particularly with respect to identifying a settlor with the requisite capacity and intention, a trustee with duties to perform, and a definite beneficiary; but, it does not further identify any property requirements to establish a trust. See Tenn. Code Ann. § 35-15-402 (West 2017). Tennessee case law appears to indicate that an express trust cannot exist without trust property. SeeIn re Estate of Darken, No. M2016-00711-COA-R3, CV, 2016 WL 7378806, at *10 (Tenn. Ct. App. Dec. 20, 2016); Myers v. Myers, 891 S.W.2d 216, 218 (Tenn. Ct. App. 1994). Tennessee’s trust code defines “property” generally as “anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein,” including interests created through beneficiary designations under insurance policies, financial instruments, deferred compensation, and other retirement arrangements. See Tenn. Code Ann. § 35-15-103(23), comment. Additionally, under Tennessee’s statutes on wills, Tennessee appears to recognize at least some unfunded trusts by describing situations in which a will may validly transfer property to a trustee of a trust. See Tenn. Code Ann. § 32-3-106. Specifically, Tenn. Code Ann. § 32-3-106(a)(1) indicates a will may validly transfer property to the trustee of, among other types of trusts, an “unfunded life insurance trust,” and a trust identified in a will, where its terms are set forth in a written instrument other than a will, “regardless of the existence, size, or character of the corpus of the trust.” Thus, while Tennessee appears to generally require trust property to establish a trust, Tennessee defines “property” for trust purposes to include interests created through beneficiary designations under insurance policies, financial instruments, and deferred compensation and other retirement arrangements. Tennessee law additionally appears to recognize a trust may be established with no funds under certain situations.

CONCLUSION

[None]

This Regional Chief Counsel opinion examines whether the Charities Pooled Trust (CPT), which operates in every state of Region IV (Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee), qualifies as a pooled trust under the Social Security Act, 42 U.S.C. § 1396p(d)(4)(C), and the implementing provisions of the Program Operations Manual System. The opinion concludes that the CPT qualifies as a pooled trust in all states of Region IV.

QUESTION

Whether the Charities Pooled Trust (CPT), which operates in every state in this region, qualifies as a pooled trust under the Social Security Act (Act), 42 U.S.C. § 1396p(d)(4)(C), and the relevant provisions of the Program Operations Manual System (POMS).

OPINION

CPT qualifies as a pooled trust under 42 U.S.C. § 1396p(d)(4)(C) and the relevant POMS provisions.

BACKGROUND

Between October 2016 and July 2018, CPT executive director, W~, executed Master Trust Agreements (MTAs) in Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. Each trust established CPT as a pooled trust in these respective states. The MTA for each state includes identical provisions, except with respect to the extent to which the MTA addresses directed trustees, whether the trustee will notify the state’s Medicaid agency about a beneficiary’s death, and how the trust will distribute the remainder funds in an individual benefit account (IBA) upon a beneficiary’s death. The MTAs also have identical joinder agreements.

NH1, a number holder living in Kentucky, NH2, a number holder living in Tennessee, and NH3, a number holder living in Florida, receive Supplemental Security Income (SSI). NH1 signed a Joinder Agreement with CPT under the Kentucky MTA on February 13, 2017. NH2’s parent and grandparent signed a Joinder Agreement with CPT under the Tennessee MTA on July 3, 2019. NH3 signed a Joinder Agreement with CPT under the Florida MTA on August 22, 2018. NH1, NH2, and NH3 funded the IBAs of their respective trusts through the transfer of their own assets to the trusts.

I. Purpose and Establishment of the Trust

CPT’s MTAs identify CPT as the Trustee. See MTA, § 2.2.^[4] They identify CPT as a non-profit corporation recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code. Seeid.

The MTAs indicate that the trust intends to comply with 42 U.S.C. § 1396p(d)(4)(C) (§ 1917(d)(4)(A) of the Act). See MTA, § 1.5. They indicate that each trust shall establish a separate account for each beneficiary, but may pool the amounts in the separate accounts for investment and management purposes. See MTA, §§ 4.1, 9.1.

The MTAs classify a trust beneficiary as a person with a disability, as defined by 42 U.S.C. § 1382c(a)(3) (codifying § 1614(a)(3) of the Act), whom a grantor identifies as the sole recipient of services and benefits from the individual account created within the trust for such person with a disability. See MTA, § 13.12; Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.4; Florida, Kentucky, Tennessee MTA, § 2.6. A trust beneficiary, or the trust beneficiary’s parent, grandparent, or legal guardian, or another person or entity acting pursuant to a court order or other legal authority, can be a grantor and can establish an account for a trust beneficiary in the Trust and contribute assets to the trust for the sole benefit of the trust beneficiary. See MTA, § 3.1; Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.3; Florida, Kentucky, Tennessee MTA, § 2.5. The stated purpose of the trust is to supplement, not displace, a beneficiary’s government benefits. See MTA, § 3.2.

II. Distribution and Powers of the Trustee

The Trustee is responsible for overseeing the custody, investment asset allocation model selection, and disbursement of funds contributed to the trusts. See MTA, § 2.2. In carrying out this responsibility, the Trustee may retain an independent investment advisor to handle the custody, investment, and management of the trust assets. See Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.5; Florida, Kentucky, Tennessee MTA, § 2.7. The Trustee and any investment advisor shall perform their duties provided in the trusts to receive, hold, manage, and control all income and principal in the IBAs comprising the Trust as may be appropriate to effectuate the intent and purpose of the trusts. See MTA, § 10.1.

The Trustee shall hold, administer, and distribute all property and income from an individual trust beneficiary’s IBA for the sole benefit of the beneficiary. See MTA, §§ 6.1, 6.2. Distributions are solely within the Trustee’s discretion, but the Trustee must make them for the sole benefit of a beneficiary and should make them if the distribution has the effect of supplanting or replacing any government assistance or disqualifying a beneficiary from receiving government assistance. See MTA, § 6.1.

The Trustee assesses enrollment fees for the fees and expenses associated with a beneficiary enrolling in one of the trusts and establishing an IBA and annual administration fees for the administration and maintenance of an IBA at the time a beneficiary enrolls in the trust. See MTA, § 9.2. The Trustee may adjust the enrollment fees schedule and annual administration fees schedule from time to time. See id.

III. Irrevocability and Spendthrift

The trusts established under each state’s MTA are irrevocable upon the Trustee’s acceptance of a beneficiary’s joinder agreement and related required documents, and the grantor’s contributed amount, and upon the grantor and beneficiary completing the enrollment requirements to join the trust. See MTA, § 1.3. The MTA treats the amount contributed to a beneficiary’s IBA as irrevocably assigned, transferred, conveyed and delivered to the Trustee to be used for the sole benefit of the beneficiary. MTA, § 4.2. Once the Trustee accepts the contributed amount, it is not refundable to the beneficiary. Seeid. A beneficiary has no right to demand a distribution from the trust for his or her own support or maintenance. See MTA, § 9.8.

Each trust is a spendthrift trust. See MTA, § 9.9. No beneficiary can subject any part of either trust to an assignment; attachment; levy; a creditor’s control; a creditor’s legal or equitable action, proceeding, suit, or procedure to take from the Trust; or a compelled distribution to any beneficiary’s creditor. Seeid.

IV. Termination

Upon a beneficiary’s death, the Trustee will use remaining funds in the beneficiary’s IBA to pay back to a state’s Medicaid agency or agencies an amount equal to the total amount of medical assistance paid on behalf of the beneficiary under a state Medicaid plan. See MTA § 7.2B, D. If the payback amount is equal or greater than the amount remaining in the IBA, the MTAs for Alabama, Georgia, and North Carolina indicate that the trust will retain ten percent of the remaining amount and use the remaining ninety percent to pay back the Medicaid agency or agencies. Alabama, Georgia, North Carolina MTA, § 7.2D.1. The MTAs for the rest of the states in the Atlanta region indicate that under the same circumstances, the Trust will retain fifty percent of the remaining amount and use the remaining fifty percent to pay back the Medicaid agency or agencies. See Kentucky, Mississippi, South Carolina, Tennessee MTA, § 7.2D.1. If the payback amount is less than the amount remaining in the IBA, the MTAs for every state in the Atlanta region indicate that the Trust will retain five percent of the amount remaining in the IBA and pay back the full amount to the Medicaid agency or agencies. See MTA, § 7.2D.2. The Trustee will distribute any remaining amount left after the Trust retains five percent and pays back the Medicaid agency or agencies to any remainder beneficiaries of the deceased beneficiary identified in the IBA joinder agreement. See MTA, § 7.2C, D.2.

A beneficiary cannot terminate the Trust or any part of the beneficiary’s IBA at any time, under any circumstances. See MTA, § 8.1. If the Trust terminates during the lifetime of a beneficiary, the Trustee will use any funds remaining in an IBA to pay back a state’s Medicaid agency or agencies an amount equal to the total amount of medical assistance paid on behalf of the beneficiary under a state Medicaid plan, with the remaining amounts distributed to the beneficiary. See MTA, § 8.1.

DISCUSSION

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

To be eligible for Supplemental Security Income (SSI), the dollar value of a claimant’s countable resources cannot exceed certain statutory limits. See 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.

B. The MTAs for every state in the Atlanta Region qualifies as a pooled trust.

The MTAs for every state in this region qualify as pooled trusts. As further explained below, the MTAs meet each of the six criteria articulated in 42 U.S.C. § 1396p(d)(4)(C) as follows:

1. Disabled Individual

To qualify as a pooled trust, the trust must contain “the assets of an individual who is disabled.” 42 U.S.C. § 1396p(d)(4)(C); see POMS SI 01120.203.D.2 (stating that “the individual whose assets were used to establish the trust account must be disabled for SSI purposes . . . .”). That requirement is satisfied here.

The MTAs require that a trust beneficiary be a person with a disability. See MTA, § 13.12; Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.4; Florida, Kentucky, Tennessee MTA, § 2.6. Although a grantor besides the trust beneficiary may contribute assets to the trust, the grantor makes those contributions for the sole benefit of the trust beneficiary. See MTA, § 3.1; Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.3; Florida, Kentucky, Tennessee MTA, § 2.5. Additionally, the individuals who established IBAs under the MTAs for Florida, Kentucky, and Tennessee are disabled and used their own assets to fund their IBAs.

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 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 MTAs, CPT is the settlor and trustee of the MTAs and is a non-profit corporation under section 501(c)(3) of the Internal Revenue Code. MTA, § 2.2. CPT is a fictitious name for the Institute for Health Care Advocacy, Inc. See sunbiz.org – Florida Department of State, http://dos.sunbiz.org/scripts/ficidet.exe?action=DETREG&docnum=G09000149562&rdocnum=G09000149562 (last accessed Feb. 24, 2020). The Institute for Health Care Advocacy, Inc. is an active not-for-profit Florida corporation. See sunbiz.org – Florida Department of State, http://search.sunbiz.org/Inquiry/CorporationSearch/SearchResultDetail?inquirytype=EntityName&directionType=Initial&searchNameOrder=INSTITUTEFORHEALTHCAREADVOCACY%20N930000037871&aggregateId=domnp-n93000003787-3d08880b-9b2a-400f-bc4b-4f26864703fb&searchTerm=Institute%20for%20Health%20Care%20Advocacy&listNameOrder=INSTITUTEFORHEALTHCAREADVOCACY%20N930000037871 (last accessed Feb. 24, 2020). The fictitious name registration for CPT expired on December 31, 2019. See sunbiz.org – Florida Department of State, http://dos.sunbiz.org/scripts/ficidet.exe?action=DETREG&docnum=G09000149562&rdocnum=G09000149562 (last accessed Feb. 24, 2020). However, 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. Ann. § 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 CPT 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 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); seePOMS 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 MTAs for every state in this region meet these requirements.

The MTAs indicate that each trust shall establish a separate account for each beneficiary, but trust may pool the amounts in the separate accounts for investment and management purposes. MTA, §§ 4.1, 9.1. The MTAs also indicate that the trustee, or its agent, must “maintain records for each Trust IBA in the name of each Trust Beneficiary and showing the Contributed Amount plus any income earned from the Contributed Amount.” MTA, § 4.1. The trust must provide periodic reports, at least annually, about receipts and disbursements to and from the individual’s account. See MTA, § 9.4.

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); accord 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,” 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.

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 MTAs for every state in this region meet this requirement. The MTAs indicate that the trustee must “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.” MTA, § 6.2 (emphasis in original); MTA, § 6.3 (“Trust Beneficiary’s IBA is for the sole benefit of the Trust Beneficiary.”) (emphasis in original).

The MTAs also allow for fees in accordance with a written fee schedule and expenses for administering the trust. MTA, §§ 9.2, 10.5. The MTAs further state that the trust will compensate a trustee for “services rendered and reimbursed reasonable expenses incurred on behalf of the Trust or a Trust Beneficiary.” MTA, § 10.5. Additionally, the MTAs allow 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. MTA, § 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 MTAs contain an early termination provision that accounts for a scenario where the trust terminates prior to the death of the beneficiary. MTA, Art. 8. 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. See POMS SI 01120.199.F.3.

The MTAs for this region satisfy these criteria. Specifically, the MTAs indicate 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. MTA, § 8.1. The MTAs also indicate that, after paying the states, “if there are any assets remaining, the Trustee shall distribute all of the remaining assets to the Trust Beneficiary.” MTA, § 8.1. Additionally, the beneficiary does not have the power to terminate his or her trust account. See MTA, § 8.1.^[5]

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

To qualify as a pooled trust, the trust account also 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); see POMS SI 01120.203.D.6. The MTAs here meet this requirement, as they require that a beneficiary or a grantor, who must be a parent, grandparent, legal guardian, or other person acting pursuant to a court order, execute the joinder agreement to establish an IBA under the MTA. MTA, §§ 3.1, 13.2; Alabama, Georgia, Mississippi, North Carolina, South Carolina MTA, § 2.3; Florida, Kentucky, Tennessee MTA, § 2.5. The joinder agreements submitted for NH1, NH2, and NH3 for the Florida, Kentucky, and Tennessee MTAs, respectively, also show that each of these individuals have established their IBAs either through their own actions or through the actions of their parents.

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. The trustee may pay taxes and reasonable fees and costs before paying the state for medical assistance. SeePOMS SI 01120.203.E.1.

The MTAs meet this requirement, as well. Specifically, the MTAs allocate remaining assets between the trust, the state(s), and the remainder beneficiaries. MTA, § 7.2. If the state medical assistance amount is equal to or greater than the total amount left in the beneficiary’s IBA, the MTAs for Alabama, Georgia, and North Carolina state that the trust will retain ten percent of the remaining amount and use the remaining ninety percent to pay back the Medicaid agency or agencies. See Alabama, Georgia, North Carolina MTA, § 7.2D.1. The MTAs for the rest of the states in the Atlanta region state that under the same circumstances, the trust will retain fifty percent of the remaining amount and use the remaining fifty percent to pay back the Medicaid agency or agencies. See Kentucky, Mississippi, South Carolina, Tennessee MTA § 7.2D.1. If the state medical assistance amount is less than the amount left in the beneficiary’s IBA, the trust in every state in the Atlanta region will retain the first five percent of the amount; the trustee will pay the full amount owed to the state; and the trustee will pay any remaining amount to the beneficiary’s heirs. See MTA, § 7.2D.2. This distribution scheme comports with the statute.

In addition, the MTAs allow the trustee to pay certain administrative expenses, such as taxes and reasonable fees and costs, before paying the state for medical assistance. MTA, § 7.4A. The MTAs incorporate by reference the allowable and prohibited expenses in SSA’s POMS, by stating the Trustee will not pay any administrative expenses not allowed by the SSA’s POMS. MTA, § 7.4B.

CONCLUSION

The Trust complies with all the requirements for a pooled trust under section 1917(d)(4)(C) of the Act and the implementing POMS provisions.

This Regional Chief Counsel (RCC) opinion discusses whether the Tennessee Life Enrichment Pooled Fund Trust (Trust), as amended, meets the requirements for exception under section 1917(d)(4)(C) of the Social Security Act (Act). The RCC concludes that the amended trust complies with all the requirements for a pooled trust.

QUESTION

Whether the Tennessee Life Enrichment Trust (LET) Pooled Fund Trust (Trust) meets the requirements for a pooled trust under section 1917(d)(4)(C) of the Social Security Act (Act) and the relevant provisions of the Program Operations Manual System (POMS).

OPINION

The amended Trust complies with all the requirements for a pooled trust under section 1917(d)(4)(C) of the Act and the relevant POMS provisions.^[6]

BACKGROUND

According to the information provided, C~, the number holder (NH), receives Supplemental Security Income (SSI) and is a beneficiary of the Trust. In a legal opinion dated August 14, 2018, we advised that the Trust did not meet the requirements for a pooled trust under section 1917(d)(4)(C) of the Act and the relevant POMS provisions (copy attached).^[7] Specifically, we explained that the Trust was not clearly managed by a non-profit organization and contained an unacceptable early termination provision. See Act § 1917(d)(4)(C)(i), (iii); POMS SI 01120.199.F; POMS SI 01120.225.D. On October 8, 2018, General Counsel for LET submitted an amended Trust to the agency for review.^[8] See LET Attorney Letter.

The amended Trust now provides that although funds in the various accounts are pooled for investment and management purposes, separate accounts are maintained for each beneficiary. See Trust, Who Can Set Up an Account. The Trust also now states that if LET employs a for-profit entity to handle certain Trust functions, LET will “maintain ultimate managerial control.” Trust, Potential Conflict of Interest. The non-profit entity “will always be subordinate” to LET managers. Id.

The amended Trust’s early termination provision provides that if the Trust becomes impossible or impractical to carry out the purpose of the Trust, then the LET Board may terminate the Trust or resign as Trustee. See Trust, Amendment or Termination of the Trust. In such case, LET will “first try” to transfer the sub-account assets to another trust that meets the requirements of § 1917(d)(4)(C) of the Act. Id. If transfer to another pooled trust is not possible, the Trust will reimburse the state(s) in an amount equal to the total amount of medical assistance paid under the state(s)’ Medicaid plan(s). See id. After reimbursement to the state(s) and payment of allowed expenses, all remaining funds must be given to the beneficiary. See id.

LET also revised the Trust’s provisions regarding what happens to a beneficiary’s sub-account upon the beneficiary’s death. See Trust, Residual Amounts at the Beneficiary’s Death. Upon a beneficiary’s death, “to the extent that assets are not retained by the [T]rust,” the State of Tennessee and any other state that provided Medicaid benefits in its proportionate share shall have priority over all other debts and administrative expenses, except those allowable under the POMS. If there is an insufficient amount remaining in the beneficiary’s sub-account to pay each state in full, then each state will be paid its proportionate share of the amount remaining based on the monetary value of the support provided by each state. Any assets retained by the Trust will be used for direct or indirect benefit of other beneficiaries with disabilities. If assets remain in the sub-account after reimbursement to the state(s), the balance will be paid to the remainder beneficiaries designated in the Joinder Agreement.

As discussed in our August 2018 legal opinion, to satisfy the exception for pooled trusts under section 1917(d)(4)(C), a trust must contain the assets of an individual who is disabled (as defined in section 1614(a)(3)) and meet the following conditions:

(i) The trust is established and managed by a non-profit association;

(ii) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts;

(iii) Accounts in the trust are established solely for the benefit of individuals who are disabled (as defined in section 1614(a)(3)) by the parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court; and,

(iv) 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 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 under this title.

Act § 1917(d)(4)(C); POMS SI 01120.203.D.1.

The amended Trust complies with the requirement that the Trust be managed by a non-profit association. See Act § 1917(d)(4)(C)(i). Although a non-profit organization may employ the services of a for-profit entity, the non-profit organization must maintain “ultimate managerial control” over the trust. POMS SI 01120.225.D. The use of a for-profit entity must always be subordinate to the non-profit managers of the pooled trust. See id. The Trust provides that LET, a non-profit organization, established and manages the Trust. See Trust, About The Pooled Trust. Further as amended, the Trust now provides that should LET employ the services of a for-profit entity, LET will maintain “ultimate managerial control” and the for-profit entity “will always be subordinate” to LET’s managers. Trust, Potential Conflict of Interest.

The amended Trust’s early termination provision also complies with the requirement that the trust sub-accounts be established solely for the benefit of each beneficiary. See Act § 1917(d)(4)(C)(iii); POMS SI 01120.203.D.5. An early termination is acceptable if it “solely” allows for transfer of the sub-account assets to another pooled trust. POMS SI 01120.199.F.2. Alternatively, the early termination provision must require the assets to be paid first to the state(s) for medical assistance provided to the individual under the state Medicaid plan(s), with any remaining funds used only for allowable administrative expenses, reasonable compensation to the trustee, reasonable costs for services rendered on behalf of the beneficiary, or distributions to the trust beneficiary. See POMS SI 01120.199.F.1. As written, the Trust’s early termination provides that it will first try to transfer the sub-account assets to another pooled trust. See Trust, Amendment or Termination of the Trust. See POMS SI 01120.199.F.2. However, if that is not possible, the amended Trust provides, consistent with an acceptable early termination provision, that it shall reimburse the state(s) in an amount equal to the total amount of medical assistance paid under each state’s Medicaid plan and, after reimbursement to the states and payment of allowed expenses,^[9] all remaining funds will be distributed to the trust beneficiary. See POMS SI 01120.199.F.1.

The Trust’s amended section regarding termination upon a beneficiary’s death also continues to comply with the Medicaid reimbursement provision of the Act. See Act § 1917(d)(4)(C)(iv). To qualify, any funds of a deceased beneficiary not retained by a trust must be paid to any states that have provided medical assistance under a Medicaid plan. See POMS SI 01120.203.D.8. The states must be listed as first payee, except for allowable administrative expenses. See id. If the trust does not have sufficient funds to reimburse each state that had provided medical assistance, the trust must reimburse each state on a pro-rata basis. See id. As written, the amended Trust provides that for assets not retained by the Trust,^[10] the State of Tennessee and all other states that have provided Medicaid benefits will have priority over any other debts or administrative expenses except allowable administrative expenses listed in the agency’s POMS.^[11] See Trust, Residual Amounts at the Beneficiary’s Death. If there is an insufficient amount in the beneficiary’s sub-account to fully reimburse each state, then each state will be paid the proportionate share of the amount remaining, based on the monetary value of the support provided by each state. See id. Thus, this revised section is still consistent with the instructions in the POMS.

The amended Trust complies with all the requirements for a pooled trust under section 1917(d)(4)(C) of the Act and the implementing POMS provisions.

In this case the trustees did not disclose the fact that they had established a trust in 2004 for a disabled SSI recipient. Recently, the local field office discovered it and determined it was countable because this special needs trust allowed funeral expenses to be paid prior to any Medicaid reimbursement. The trustees petitioned the state court in January 2010 to change the language to conform to the law and backdate the changes to 2004 through a nunc pro tunc order. The Regional Chief Counsel’s opinion clearly states that under Tennessee law this type of retro change can only happen as the result of an error on the part of the court, such as a typographical error. It cannot overcome the language submitted by the trustees’ legal advisors in 2004. The opinion establishes that the trust can only be excludable for SSI from the date in 2010 that the court amended it making it non-countable.

QUESTION

You have asked whether the Social Security Administration (SSA) is bound by a Tennessee state court order that deleted language in a Supplemental Security Income (SSI) recipient's trust when the order was entered nunc pro tunc, that is, effective as of the date the trust was created.

OPINION

We believe the State court did not have the authority under Tennessee law to enter its order nunc pro tunc. Therefore, SSA is not bound by the court's order to the extent the order attempted to amend the trust retroactively, and SSA should consider the trust amended only as of the date the court entered its order.

BACKGROUND

SSA found Aimee S. A~ (Recipient) entitled to SSI in 1990. On December 9, 2004, Francis A. A~ and Sue E. A~ (Recipient's parents) created an "Irrevocable Supplemental Care Trust" (Trust) for Recipient pursuant to the order and under the authority of the Chancery Court of Jefferson County, Tennessee. The Trust noted Recipient's parents were the court-appointed Co-Conservators of the person of Recipient and Co-Trustees of the Trust. Recipient's parents established the Trust to hold funds payable to Recipient as the result of the sale of the residence she owned. The Trust noted the amount of funds Recipient would receive from the sale of the property "would jeopardize the benefits paid or payable for her support and care . . . ." The Trust indicated the Trust was an "irrevocable Supplemental Care Trust" section 1917(d)(4)(A) of the Social Security Act (Act). Article I of the Trust, titled Irrevocability, states that no court, conservator, trustee, or beneficiary has the right to alter, amend, revoke, or terminate the trust or any of its provisions except as expressly provided by the Trust. Article I states that if consistent with the intent of the Trust, the trustees may ask the court to amend the Trust "so that it conforms to the regulations and policies that are approved by any governing body or agency relating to Medicaid benefits or any similar successor programs as well as any other pertinent State or Federal programs."

Article IV of the Trust, titled Trust Distributions, delineates how the trustees may use the funds in the Trust and how the trustees should dispose of the Trust funds upon Recipient's death. Before the court amended the Trust, the first sentence of Paragraph H of Article IV stated that upon Recipient's death "and after payment of final expenses administrative costs, including funeral or burial expenses, the Trustees shall satisfy any valid claims for reimbursement of medical assistance benefits paid on behalf of [Recipient] during her lifetime which the Trust is legally obligated to satisfy pursuant to [section 1917(d)(4)(A) of the Act] . . . ."

In a subsequent review of Recipient's income and resources, SSA discovered the Trust. Based on the language in the Trust allowing the payment of funeral or burial expenses before the reimbursement of medical assistance benefits paid on behalf of Recipient by the State(s), SSA determined the Trust was not a valid trust under section 1917(d)(4)(A) of the Act and was a countable resource. Therefore, SSA suspended Recipient's SSI and assessed an overpayment.

After SSA informed Recipient of the suspension and overpayment, Recipient's parents filed a motion with the Chancery Court of Jefferson County, Tennessee, "to correct a scrivener[']s error in the original Trust . . . ." On January 21, 2010, the court issued an order amending the Trust. The court ordered that the Trust "is amended by deleting the words 'including any funeral or burial expenses' from the first sentence of Paragraph H of Article IV of the Trust . . . ." The court found that the amendment "is consistent with the intent of the Trust and that such language was inserted originally by error." The court further ordered that "this amendment shall be effective nunc pro tunc in that it is reflective of the parties' original intent."

DISCUSSION

SSI is a general public assistance program for aged, blind, or disabled individuals who meet certain income and resource restrictions and other eligibility requirements. See Act §§ 1602, 1611(a); 20 C.F.R. §§ 416.110, 416.202 (2009). "Resources" include cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for his or her support and maintenance. See Act § 1613; 20 C.F.R. § 416.1201(a) (2009). Generally, the corpus of a trust established with the assets of an individual is considered a resource. See Act § 1613(e)(1)-(3); see also Act § 1613(e)(6)(B) (defining corpus and assets).

However, a trust established pursuant to section 1917(d)(4)(A) of the Act, commonly referred to as a Special Needs trust, is not a resource. See Act §§ 1613(e)(5), 1917(d)(4)(A); Program Operations Manual System (POMS) SI 01120.203.B.1. A Special Needs trust must:

(1) Contain the assets of a disabled individual under age 65;

(2) Be established for the benefit of the individual by a parent, grandparent, or legal guardian of the individual, or a court;

(3) Provide that the State(s) will receive all amounts remaining in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan.

See Act § 1917(d)(4)(A); POMS SI 01120.203.B.1.a. To satisfy the requirement that the State(s) be reimbursed for any medical assistance provided to the individual, the trust must list the State(s) as the first payee, with priority over payment of other debts and administrative expenses except for certain specific expenses. See POMS SI 01120.203.B.1.h. Allowable administrative expenses that may be paid from the trust prior to reimbursement of medical assistance provided by the State(s) include taxes due from the trust and reasonable fees for the administration of the trust estate. See POMS SI 01120.203.B.3.a. However, expenses and payments not permitted prior to reimbursement of medical assistance provided by the State(s) include funeral expenses. See POMS SI 01120.203.B.3.b.

In this case, the original language of the first sentence of Paragraph H of Article IV of the Trust provided that upon Recipient's death, the Trust would reimburse "medical assistance benefits paid on behalf of [Recipient] during her lifetime which the Trust is legally obligated to satisfy pursuant to" section 1917(d)(4)(A), but only "after payment of final expenses and administrative costs, including funeral or burial expenses . . . ." (Emphasis added.) As noted above, funeral expenses are not a permissible expense prior to reimbursement of medical assistance to the State(s). See POMS SI 01120.203.B.3.b. Thus the Trust as originally created did not comply with section 1917(d)(4)(A) of the Act. See Act § 1917(d)(4)(A); POMS SI 01120.203.B.1.a., B.1.h, B.3.b.

On January 21, 2010, the court issued an order amending the first sentence of Paragraph H of Article IV of the Trust to delete the phrase "including funeral or burial expenses." The amendment would appear to render the Trust in compliance with the requirement that the State(s) receive all amounts remaining in the trust upon Recipient's death up to an amount equal to the total medical assistance paid by the State(s) on behalf of Recipient.^[12] See Act § 1917(d)(4)(A); POMS SI 01120.203.B.1.a, B.1.h. The court order stated the amendment was effective nunc pro tunc, meaning the court intended to amend the Trust effective from the date the Trust was created, i.e., December XX, 2004. However, although we believe the court's order effectively amended the trust as of the date of the court order, we do not believe the court had the authority under Tennessee law to issue a nunc pro tunc order amending the Trust effective as of the date the Trust was originally created.

Nunc pro tunc is a Latin term meaning "now for then." See Blackburn v. Blackburn, 270 S.W.3d 42, 49 n.13 (Tenn. 2008) (citing Black's Law Dictionary, 964 (5th ed. 1979)). "All courts have the right, and it is their duty, to make their records speak the truth, and a court, therefore, in a proper case, of its own motion, may order a nunc pro tunc entry to be made. . . ." Blackburn, 270 S.W.3d at 51 (quoting Rush v. Rush, 37 S.W. 13, 14 (Tenn. 1896) (quotation marks omitted)). In addition, "in a proper case, a nunc pro tunc order may be used to correct an existing decree, as well as to supply a missing decree." McCown v. Quillin, 344 S.W.2d 576, 583 (Tenn. Ct. App. 1960). However:

The error justifying a nunc pro tunc entry must have been due to the inadvertence or mistake of the court and not counsel. Moreover, an entry of a judgment nunc pro tunc should only be granted when it can be shown by clear and convincing evidence that the judgment sought is the one previously announced.

Blackburn, 270 S.W.3d at 50 (citations omitted). "[A]s a prerequisite to an entry nunc pro tunc, there generally must exist some written notation or memorandum indicating the intent of the trial court to enter the judgment on the earlier date." Id. at 54 (footnote omitted).

The general rule is that to justify a nunc pro tunc order there must exist some memorandum or notation found among the papers or books of the presiding judge, and a nunc pro tunc order will not be valid unless there is some such memorandum showing what judgment or order was actually made and these jurisdictional facts recited.

Dewees v. Sweeney, 947 S.W.2d 861, 864 (Tenn. Ct. App. 1997) (quoting Gillespie v. Martin, 109 S.W.2d 93 (Tenn. Ct. App 1937) (quotation marks omitted)).

A prerequisite for a nunc pro tunc order then, is some previous action by the court that is not adequately reflected in its record. It may not be granted to relieve an attorney from the consequences of his own failure to comply with the rules, but only to correct mistakes or omissions arising from the actions of the court itself.

Id.; see also Blackburn, 270 S.W.3d at 55 ("The error justifying a nunc pro tunc entry must have been due to the inadvertence or mistake of the court, not the attorneys or parties"). "Therefore, when determining whether it should enter an order nunc pro tunc, the trial court should generally refer only to written notations or memoranda indicating the court's intent to enter the judgment on a specified earlier date." Blackburn, 270 S.W.3d at 55.

"Although the trial court has the inherent authority to enter [an order] nunc pro tunc to amend or rectify the record, a nunc pro tunc [order] may not be entered in an attempt to make the record reflect what should have happened, rather than what actually did occur." Blackburn, 270 S.W.3d at 55-56. "A 'nunc pro tunc order' can only be made when the thing ordered has previously been allowed, but by inadvertence has not been entered. It applies only to orders of court, and never to action of counsel." Cantrell v. Humana of Tenn., Inc., 617 S.W.2d 901, 902 (Tenn. Ct. App. 1981) (quoting Grizzard v. Fite, 191 S.W. 969 (Tenn. 1916)).

In this case, the information provided indicates the "scrivener's error" the court corrected in its January 2010 order was the result of an error or negligence by Recipient's parents or the attorney for Recipient's parents who prepared the Trust document. The court noted the prohibited language allowing for the payment of funeral or burial expenses before reimbursement of State medical assistance payments was "inserted originally by error" and it entered its order nunc pro tunc to reflect "the parties' original intent." Nothing in the court's order suggests that the error was due to a mistake by the court, as required for entry of an order nunc pro tunc. See Blackburn, 270 S.W.3d at 50, 54-55; Dewees, 947 S.W.2d at 864; Cantrell, 617 S.W.2d at 902. Moreover, the information provided, including the court order and the Trust document, does not provide clear and convincing evidence that the court intended the Trust to exclude the prohibited language when the Trust was originally created. See Blackburn, 270 S.W.3d at 50; Dewees, 947 S.W.2d at 864. The court could not enter its order nunc pro tunc in an attempt to make the Trust reflect what should have been omitted when the Trust was originally created, rather than what was actually included in the Trust. See Blackburn, 270 S.W.3d at 55-56. Therefore, we believe the court did not have the authority to enter its order nunc pro tunc.

We recognize SSA's policy that although SSA is not bound by the decision of a State court in a proceeding to which SSA was not a party, SSA is not free to ignore an adjudication of a State court where the following prerequisites are found: (1) an issue in a claim for Social Security benefits previously has been determined by a State court of competent jurisdiction; (2) this issue was genuinely contested before the State court by parties with opposing interests; (3) the issue falls within the general category of domestic relations law; and (4) the resolution by the State trial court is consistent with the law enunciated by the highest court in the State. See Social Security Ruling (SSR) 83-37c (adopting Gray v. Richardson, 474 F.2d 1370 (6th Cir. 1973)). However, the order in this case does not meet all of the prerequisites in SSR 83-37c. The court's order was not genuinely contested by parties with opposing interests, and the issue addressed by the court's order did not fall within the general category of domestic relations law. Moreover, as discussed above, the court's entry of a nunc pro tunc order was not consistent with Tennessee law. Thus, SSA was not bound under SSR 83-37c, or any other legal authority, to accept the nunc pro tunc aspect of the court's order.

CONCLUSION We believe SSA is not bound by the court's order entered nunc pro tunc purporting to amend the Trust as of the date the Trust was originally created. SSA should consider the Trust amended as of the date of the court order—January 21, 2010—and not before that date.

Very Truly Yours

Mary A. S~

Regional Chief Counsel

By: Brian C. H~

Assistant Regional Counsel