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Administrative Plan 7/1/2025 Page 6-41 <br />A revocable trust is a trust that the creator of the trust may amend or end (revoke). When there is <br />a revocable trust, the creator has access to the funds in the trust account. <br /> A revocable trust that is under the control of the family is included in net family assets when <br />the grantor is a member of the assisted family. If a revocable trust is included in the <br />calculation of net family assets, then the actual income earned by the revocable trust is also <br />included in the family’s income. For example, interest earned or rental income if the property <br />is held in the trust. The PHA must calculate imputed income on the revocable trust if net <br />family assets are more than the HUD-published threshold amount, which is adjusted annually <br />and listed in HUD’s Inflation Adjusted Values tables ($50,000 for 2024, and $51,600 for <br />2025), and actual income from the trust cannot be calculated (e.g., if the trust is comprised of <br />farmland that is not in use). <br /> A revocable trust that is not under the control of the family is excluded from net family <br />assets. This happens when a member of the assisted family is the beneficiary of a revocable <br />trust, but the grantor is not a member of the assisted family. In this case the beneficiary does <br />not “own” the revocable trust, and the value of the trust is excluded from net family assets. <br />For the revocable trust to be considered excluded from net family assets, no family or <br />household member may be the account’s trustee. <br />For both irrevocable and revocable trusts, if the value of the trust is not considered part of net <br />family assets, then distributions from the trust are treated as follows: <br /> All distributions from the trust’s principal are excluded from income. <br /> Distributions of income earned by the trust (i.e., interest, dividends, realized gains, or other <br />earnings on the trust’s principal), are included as income unless the distribution is used to pay <br />for the health and medical expenses for a minor. <br />Life Insurance [FR Notice 2/14/23 and Notice PIH 2023-27] <br />Net family assets do not include the value of term life insurance, which has no cash value to the <br />individual before death. <br />The cash value of a life insurance policy available to a family member before death, such as a <br />whole life or universal life policy, is included in the calculation of the value of the family’s <br />assets. The cash value is the surrender value. While the cash value of an insurance policy is <br />considered an asset, the face value of any policy is not. If such a policy earns dividends or <br />interest that the family could elect to receive, the amount of dividends or interest is counted as <br />income from the asset whether or not the family actually receives it. <br />Tax Refunds [24 CFR 5.603(b)(3)(xi) and Notice PIH 2023-27] <br />All amounts received by a family in the form of federal tax refunds or refundable tax credits are <br />excluded from a family’s net family assets for a period of 12 months after receipt by the family. <br />At the time of an annual or interim reexamination of income, if the federal tax refund was <br />received during the 12 months preceding the effective date of the reexamination, then the amount <br />of the refund that was received by the family is subtracted from the total value of net family <br />assets. When the subtraction results in a negative number, then net family assets are <br />considered $0. <br />EXHIBIT 1