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New SSA Guidance Clarifies Certain IGRA Trusts Will Not Disqualify Members from SSI Benefits

December 1, 2014

Effective December 1, 2014, the Social Security Administration (SSA) is implementing a new policy for how the Agency will evaluate Indian Gaming Regulatory Act (IGRA) trusts under the Supplemental Security Income (SSI) program.  The new policy clarifies the criteria that must be met in order for members to avoid disqualification under SSI, and applies to all minor children and legally incompetent adults who participate in an IGRA trust.

For trusts meeting the new guidelines, the SSA will consider the tribe as the grantor of the trust and evaluate the trust as a third-party trust.  To be treated as a grantor trust under the new guidance:

  • the trust must be established for the benefit of minor or legally incompetent members and funded solely with per capita payments;
  • trust beneficiaries must be minors or legally incompetent at the time the trust is established;
  • contributions may be made only while the beneficiary is a minor or legally incompetent;
  • the trust must state that the tribe is the grantor and provide the tribe with grantor trust powers or interests;
  • the tribe must be the owner of trust assets for tax purposes;
  • the trust must subject trust assets to the tribe's general creditors and cease payments upon an insolvency event;
  • trust beneficiaries may not have a preferred claim on trust assets;
  • trust assets may not be available to the beneficiary until the beneficiary ceases to be a minor or legal incompetent, except for health education and welfare payments made at the discretion of the trustee; upon death, the beneficiary's share must be paid to the tribe, through inheritance laws, or under a will.

While there has been no change to the actual law and IRS has recognized grantor status for IGRA trusts for more than a decade, the SSA characterizes the guidance as a "change" rather than a "clarification," and states that the new guidance will provide only prospective relief.  Also, the SSA guidance is not in the form of a "safe harbor" like the IRS guidance it was based upon, but instead appears to set forth firm rules.  

The new guidance is an important first step tribes as this particular issue has been in negotiation for several years and still needs to be addressed through additional consultation. Progress on this issue may be a good step for future discussions with the SSA on how General Welfare Exclusion benefits impact SSI.

For more information, please contact Dante Desiderio at Dante@nafoa.org, or (202) 631-2003. 

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