Disbursements from Trusts

Disbursements From Trusts

Trust Principal Is Not a Resource

If the trust principal is not a resource, disbursements from the trust may be income to the SSI recipient, depending on the nature of the disbursements. Regular rules to determine when income is available apply.

– Disbursements Which Are Income

Cash paid directly from the trust to the individual is unearned income. Disbursements from the trust to third parties that result in the beneficiary receiving non-cash items (other than food or shelter), are in-kind income if the items would not be a partially or totally excluded non-liquid resource if retained into the month after the month of receipt (see 81 00815.550 and 81 01110.210).

For example, if a trust buys a car for the beneficiary and the beneficiary’s spouse already has a car which is excluded for SSI, the second car is income in the month of receipt since it would not be an excluded resource in the following month.

– Disbursements Which Result in Receipt of In-kind Support and Maintenance

Food or shelter received as a result of disbursements from the trust by the trustee to a third party are income in the form of in-kind support and maintenance and are valued under the presumed maximum value (PMV) rule. (See 8100835.300 for instructions pertaining to the PMV rule. See 81 01120.200F. for rules pertaining to a home.)

– Disbursements Which Are Not Income

Disbursements from the trust other than those described in 81 01120.200E.1.a. and 81 01120.200E.1.b. are not income. Such disbursements may take the form of educational expenses, therapy, medical services not covered by Medicaid, phone bills, recreation, entertainment, etc (see 81 00815.400).

Disbursements made from the trust to a third party that result in the beneficiary receiving non-cash items (other than food or shelter) are not income if those items would become a totally or partially excluded non-liquid resource if retained into the month after the month of receipt (see 81 00815.550 and 81 01110.210).

For example, a trust purchases a computer for the beneficiary. Since the computer would be excluded from resources as household goods in the following month, the computer is not income (see 81 01130.430).

Trust Principal Is a Resource

– Disbursements to or for the Benefit of the Beneficiary

If the trust principal is a resource to the individual, disbursements from the trust principal received by the individual or that result in receipt of something by the individual are not income, but conversion of a resource. (However, trust earnings are income. See 81 01110.100 for instructions pertaining to conversion of resources from one form to another. See 81 01120.200G.2. for treatment of income when the trust principal is a resource and 81 00830.500 for treatment of dividends and interest as income).

– Disbursements Not to or for the Benefit of the Beneficiary

If the trust is established with the assets of an individual or his or her spouse and the trust (or portion of the trust) is a resource to the individual:

     – any disbursement from the trust (or from that portion of the trust that is a resource) that is not made to, or for the benefit of, the individual is considered a transfer of resources as of the date of the payment and is not considered income to the individual (see 81 01150.110); and

     – any foreclosure of payment (an instance in which no disbursement can be made to the individual under any circumstances) is considered to be a transfer of resources as of the date of foreclosure. Such foreclosure is not considered income to the individual.