Earnings/Additions To Trusts

1. Trust Principal Is Not a Resource

a. Trust Earnings

Trust earnings are not income to the trustee or grantor unless designated as belonging to the trustee or grantor under the terms of the trust; e.g., as fees payable to the trustee or interest payable to the grantor. Trust earnings are not income to the SSI claimant or recipient who is a trust beneficiary unless the trust directs, or the trustee makes, payment to the beneficiary.

b. Additions to Principal

Additions to trust principal made directly to the trust are not income to the grantor, trustee or beneficiary. Exceptions to this rule are listed in SI 01120.200G.1.c. and SI 01120.200G.1.d.

c. Exceptions

Certain payments are non-assignable by law and, therefore, are income to the individual entitled to receive the payment under regular income rules. They may not be paid directly into a trust, but individuals may attempt to structure trusts so that it appears that they are so paid. Non-assignable payments include:

  Temporary Assistance to Needy Families (TANF)/Aid to Families with Dependent Children (AFDC);

  Railroad Retirement Board-administered pensions;

  Veterans pensions and assistance;

  Federal employee retirement payments (CSRS, FERS) administered by the Office of Personnel Management;

  Social Security title II and SSI payments; and

  Private pensions under the Employee Retirement Income Security Act (ERISA) (29 U.S.C.A. section 1056(d)).

d. Assignment of Income

A legally assignable payment (see 81 01120.200G.1.c. for what is not assignable), that is assigned to a trust, is income for SSI purposes unless the assignment is irrevocable. For example, child support or alimony payments paid directly to a trust as a result of a court order, are not income. If the assignment is revocable, the payment is income to the individual legally entitled to receive it.

2. Trust Principal Is a Resource

a. Trust Earnings

Trust earnings are income to the individual for whom trust principal is a resource, unless the terms of the trust make the earnings the property of another. (See 81 00810.030 for when income is counted.)

b. Additions to Principal

Additions to principal may be income or conversion of a resource, depending on the source of the funds. If funds from a third party are deposited into the trust, the funds are income to the individual. If funds are transferred from an account owned by the individual to the trust, the funds are not income, but conversion of a resource from one account to another.

“I have had very good experiences in working with Vista Points on a number of occasions with Special Needs and Pooled Trusts projects. Their staff is responsive, knowledgeable, and helpful.”-J. Buhrman

Be Informed

Know what you are risking by not taking advantage of the protection offered by a Special Needs Trust. Vista Points can connect you to the resources to establish a Special Needs Trust, all with your specific and individual needs in mind.