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circumstances are treated as countable income in the period of intended use, and countable resources thereafter: a. Prohibited distributions. The terms of the trust prohibit the trustee from making either trust principal or earnings/interest available for the trust beneficiary’s basic needs and Medicaid is covering the costs of those needs; or b. Trustee discretion. The terms of the trust provide the trustee with the discretion to make distributions to cover the trust beneficiary’s basic needs, but the trustee does not make either principal or earnings/interest available for those basic needs and they are covered by Medicaid. 6.12 Hardship Exemption A. The State has established a process in which applicants and beneficiaries may seek hardship exemption of certain Medicaid LTSS financial eligibility requirements. B. To qualify for an exemption, the Medicaid LTSS applicant or beneficiary must show that complying with the requirement poses an undue hardship. The criteria for determining undue hardship vary as follows: 1. Jointly owned real property – The State may exclude otherwise countable real property, including a former primary residence, when it is jointly owned and the sale of the property by an applicant or beneficiary would cause the other owner(s) to lose housing. For this purpose, loss of housing is considered undue hardship if the property serves as the principal place of residence for one (1) (or more) of the other owners, its sale would result in loss of that residence, and no other alternative and appropriate housing is readily available for the displaced other owner. If such undue hardship ceases to exist, the property becomes a countable resource. 2. Excess equity in a home – The State may waive denial of the home exclusion due to excess equity value in the principal place of residence if undue hardship exists under § 1917(f)(4) of the Social Security Act, 42 U.S.C. § 1396p(f)(4). The applicant or beneficiary must provide evidence that ineligibility for Medicaid LTSS based on denial of the home exclusion: a. Risk to personal health or safety. The loss of Medicaid LTSS prevents access to or the continuation of services and supports necessary to ensure the health and safety of the applicant or beneficiary is not in jeopardy;