Treatment of Irrevocable Trusts

Treatment of Irrevocable Trusts A. In the case of an irrevocable trust, where there are any circumstances under which payment can be made to or for the benefit of the individual from all or a portion of the trust, the following rules apply to that portion. 1. Payments from income or from the corpus made to or for the benefit of the individual are treated as income to the individual, provided the payment is counted as income under SSI cash assistance rules. 2. Income received by the trust which could be paid to or for the benefit of the individual is treated as a resource available to the individual. 3. The portion of the corpus that could be paid to or for the benefit of the individual is treated as a resource available to the individual; and, 4. Payments from income or from the corpus that are made, but not to or for the benefit of the individual, are treated as a transfer of assets for less than fair market value. [Refer to Miss. Admin. Code Part 103, Chapter 7] B. If no payment can be made to or for the benefit of the individual from either all of the trust or from some portion of the trust, treat the trust or the unavailable portion as a transfer of assets. The value of the trust or the value of the unavailable portion is not an available resource if it is treated as a transfer of assets. [Refer to Miss. Admin. Part 103, Chapter 7] 1. The sixty (60) month look back period for transfer of assets applies. When all or portion of the corpus or income on the corpus of a trust cannot be paid to the individual, treat all or any such portion or income as a transfer of assets under OBRA-93 transfer policy. 2. In treating these portions as a transfer of assets, the date of the transfer is considered to be either the date the trust was established or, if later, the date on which payment to the individual was foreclosed. 3. In determining for transfer of assets purposes the value of the portion of the trust which cannot be paid to the individual, do not subtract from the value of the trust any payments made, for whatever purposes, after the date the trust was established or, if later, the date payment to the individual was foreclosed. The value of the transferred amount is no less than its value on the date the trust is established or payment is foreclosed. 4. If the trustee or the grantor adds funds to that portion of the trust which cannot be paid to the individual after these dates, the addition of those funds is considered to be a new transfer of assets, effective on the date the funds are added to that portion of the trust which cannot be paid to the individual.