A third party trust is one established with assets that belong to someone other than the Medicaid or SSI applicant.[1] If the applicant has legal authority to revoke or terminate the trust and then use funds to meet his or her own needs, or if the applicant can direct the use of the trust principal for his/her support or maintenance under the terms of the trust, then the trust is a countable resource;[2] conversely, if the applicant has no legal authority to revoke or terminate the trust, or to direct the use of trust assets for his/her own support and maintenance, then the trust is not countable so long as it was not established by the applicant or funded with the applicant’s income or resources.[3] If the beneficiary can sell his or her interest in the trust (e.g., there is no valid spendthrift clause), then the trust is countable.[4]
Notes:
1. POMS SI 01120.200.B.17.
2. POMS SI 01120.200.D.1.a.
3. POMS SI 01120.200.D.2. Whether the trust is revocable, as well as the beneficiary’s ability to direct the use of trust principal, depends on the trust instrument and on State law. If the trust is irrevocable by its terms and under State law, and its use cannot be directed by the beneficiary due to a valid spendthrift clause, then it is not a countable asset. Id.
4. POMS SI 01120.200.D.1.a.
