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Medical Services Policy Manual, Section H

H-300 Transfer of Resources

H 304 Transfers to Trusts

a. Trust Established by the Client or Spouse - Medicaid Qualifying Trust A Medicaid Qualifying Trust is a trust or“similar legal device” established by an individual (or the individual’s spouse) who is the beneficiary of the trust and who gives a trustee any discretion for use of the trust fund. A “similar legal device” is defined as an arrangement, instrument, or other device which does not qualify as a trust under state law, but which has other characteristics of a trust (e.g., escrow account, savings account, pension fund, investment account or other account managed by a custodian, guardian or other individual with a fiduciary obligation). Any such legal device described above will also be considered a Medicaid Qualifying Trust. If an individual is not legally competent and a trust is established for the individual by a guardian or legal representative (including a parent for a child), using the individual’s resources, the trust will be treated as having been established by the individual, since he could not do it for himself. With a Medicaid Qualifying Trust, consider as a resource to the beneficiary (for eligibility purposes) the maximum amount that a trustee could disburse if he exercised his full discretion allowed under the terms of the trust. This amount is deemed available to the individual whether or not the distribution is actually made. The amount actually distributed by a trustee is counted as income (if paid from the current monthly interest) or a resource (if paid from the principal or from past months’ accumulated interest). This provision does not apply to any trust or initial trust decree established before April 7, 1986, solely for the benefit of an individual with a developmental disability who resides in an ICF/IID facility. 1) If Client is Trustee - If the client is trustee of a trust established by himself or his spouse, consider the trust assets as a resource if he has legal authority to revoke or dissolve the trust, or to use the assets for the benefit of himself or his spouse. 2) If Appointed Trustee with Full Discretion - If the client is beneficiary of a trust with an appointed trustee who has full discretion for use of trust funds for the client’s benefit, consider the trust assets as a resource to the client. 3) If Appointed Trustee With Limited Discretion If the appointed trustee has limited discretion, the assets will be considered available to the maximum extent allowed by the trust, whether they are distributed or not.