Upstate Estate Law, P.C. Blog

The Social Security Administration recently issued an Emergency Message to all personnel requiring workers to specifically inform SSI applicants or beneficiaries of the reasons a special needs trust has been rejected by the agency. And elder law attorneys everywhere say thank you!

In the past, when the SSA determined that assets in an SSI beneficiary’s or applicant’s trust were countable, the agency would frequently send a notice of ineligibility to the beneficiary or applicant because his/her assets exceeded the resource limit. However, this notice almost never explained the reasoning behind the SSA’s rejection of the trust.

The new Emergency Message, which went out to all field level SSA personnel, requires caseworkers to spell out exactly what portion of the Program Operations Manual System (POMS) applies to the trust being rejected. Unfortunately, the Emergency Message does not tell field workers that they have to explain their reasoning in plain English — merely citing the appropriate section of the POMS appears to be enough. While this will make it relatively easy for professionals to determine what went wrong with a trust and whether an appeal is in order, it will likely give the layperson little if any guidance about his or her trust.

To read the Emergency Message, go here.

I get this question pretty frequently. The terms above refer to two very general categories of trusts.

An inter vivos trust is a trust that was created during the lifetime of its creator (the Grantor or Trustor).

A testamentary trust is set up upon the death of its creator, usually in the creator’s Last Will and Testament.

Some distinctions are that an inter vivos trust may be freely revocable and modifiable by its creator during his/her lifetime, whereas the testamentary trust is typically irrevocable, except under certain circumstances. The inter vivos trust may be set up to accomplish asset management, incapacity planning, or Medicaid planning for its creator. A testamentary trust is useful to protect the creator’s eventual beneficiaries from dissipating their inheritance through immaturity, creditors’ claims, divorce, and the like.

These two trust types probably represent the most general distinction that can be made among trusts. Make no mistake though, there are a lot of different types of trusts that can be created. In future posts, I will write more about these different types of trusts.