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Chapter: 1600 Assets Program: MSSI, SFP 34

1640.0576.02 How to Analyze Trusts (MSSI, SFP) How to count funds held in a trust, whether as income or assets, depends on several factors:

1. who created the trust; 2. when it was created; 3. whether the trust is revocable or irrevocable; and 4. the conditions and terms of the trust. 1640.0576.03 Trusts Set Up By Others (MSSI, SFP) For trusts that are established by someone other than the individual, the individual's spouse or representative, the trust must be evaluated according to these SSI policies:

1. If the individual does not have authority to revoke or direct use of the trust, it is not considered an asset to him. Conversely, if the individual has the authority to revoke or direct use of the trust, the corpus of the trust is considered an asset to him.

2. Cash paid directly from the trust to the individual is unearned income.

3. Disbursements made by the trustee directly to a third party are not considered income to the individual.

The above policies also apply to trusts established by a will, regardless of the relationship of the now deceased grantor to the individual.

Refer to passages 1640.0576.04 and 1640.0576.07 for information on how to treat trusts established by the individual, individual's spouse or representative. 1640.0576.04 Medicaid Qualifying Trusts before 10/1/93 (MSSI, SFP) The following policy applies only to those trusts established before 10/1/93:

A Medicaid qualifying trust is a trust or similar legal device (other than through a will) created by an individual, his spouse, or legal representative under which (a) the individual may be the beneficiary of all or part of the payments from the trust, and (b) the amount of the distribution is determined by one or more trustees who are permitted to exercise any discretion with respect to the amount to be distributed to the individual.

Note: The term "Medicaid qualifying trust" (MQT) must not be confused with the term “qualified income trust”. The MQT refers to some trusts established prior to 10/1/93 which disqualified individuals for Medicaid, while the "qualified income trust" refers to certain income-only trusts permitted on or after 10/1/93 which allow individuals to qualify for ICP or HCBS.

If the trust meets the definition of a Medicaid qualifying trust, consider the maximum distribution that could be paid to the applicant/recipient by the trustee(s) as an available asset and income to the individual whether or not the distribution is made. These policies apply even if the trust is irrevocable, regardless of the purpose of the trust or whether or not the trustee(s) actually exercises their discretion.

If the trustee has no or limited discretion or ability to disburse funds to the individual, the amount that is unavailable must be considered a transfer of an asset without fair compensation and must be evaluated under transfer of asset policy if it was established within the applicable transfer look- back period. 1640.0576.05 Exceptions for Trusts before 10/1/93 (MSSI, SFP) The following trusts are exempt from the Medicaid qualifying trust provisions: