5620 Trust Funds  - A revocable or irrevocable trust shall be regarded as an available asset and/or income if the following conditions are met.

 

  1. For revocable trusts established by a client, the value of the trust shall be considered a resource available to the client. Payments from the trust to or for the benefit of the client shall be considered as income. Payments made from the trust for any other purpose shall be considered under the transfer provisions of 5720.
     

  2. For irrevocable trusts established by a client after August 10, 1993:
     

    1. if there are any circumstances under which payment can be made to or for the benefit of the client, the portion of the trust from which payments can be made shall be considered an available resource. Payments made from the trust to or for the benefit of the client shall be considered as income. Payments made from the trust for any other purpose shall be considered under the transfer provisions of 5720.
       

    2. if payment to the client cannot be made under any circumstances, the creation of the trust shall be considered as a transfer for less than fair market value under the provisions of 5720 based on the date of establishment of the trust or, if later, the date payment to the client was restricted or foreclosed. If only a portion of the trust is made unavailable in this way, that portion shall be regarded as a transfer.
       

    For purposes of subsections (1) and (2) above, a client shall be considered to have established a trust if assets of the client were used to form all or part of the trust and if established, other than by will, by the individual, the client's spouse, or any other person or entity, including a court or administrative body, with the legal authority to act for or on behalf of the client or spouse or acting at the direction or upon request of such person. In addition, the provisions of this subsection apply without regard to the purposes for which the trust was established, whether the trustees have or exercise any discretion under the trust, any restrictions on when or whether distributions may be made from the trust, or any restrictions on the use of distributions from the trust.
     

    If the trust includes assets of any other person or persons, these provisions shall apply only to the portion of the trust attributable to the assets of the individual.
     

  3. For irrevocable trusts established with the client's own assets on or prior to August 10, 1993, the trust shall be considered available up to the maximum value of the funds which may be made available under the terms of the trust on behalf of the client if: (1) that client is a beneficiary; and (2) the trustees are permitted to exercise any discretion with respect to distribution to the client. The trust may be established by the client, the client's spouse, a legal guardian (including a parent), or a legal representative who is acting on behalf of the client.

    The amount from the trust that shall be considered as an available resource is the amount that could be distributed but was not within a base period (e.g., within a month for AM purposes or over a 6-month base period for MS cases). Any amount actually distributed shall be regarded as income. Any portion of the trust which is unavailable to the individual or which is not used for the benefit of the individual shall be considered a transfer of property for less than fair market value under the provisions of 5720.
     

    NOTE: This provision shall not be applicable to trusts established prior to April 7, 1986 if the applicant/recipient is a mentally retarded individual who is residing in an intermediate care facility for the mentally retarded and the trust is solely for the benefit of the individual.
     

  4. For all other trusts, including those established with assets of someone other than the client, the trust is considered available to the client only if he/she has the ability to revoke or terminate the trust or to direct the use of the trust assets for his/her own support and maintenance.

    Mandatory periodic payments received from a trust by the client are considered an available resource equal to the present value of the anticipated string of payments unless there is a valid spendthrift clause or other language in the trust which specifically prohibits anticipation of payments. Where a valid spendthrift clause or other restrictive language exists, the periodic payments are considered countable unearned income.