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• The institutionalized person or their spouse provides more than 50% of the cost of care and support for the dependent relative. 17.2.6.2 Trusts for Disabled Individuals A trust for a disabled individual (sometimes called a third-party trust) is an irrevocable trust established solely for the benefit of: • The grantor's disabled child (of any age) • Any other disabled person who is under 65 years of age The beneficiary must meet the definition of disability in SECTION 5.2.1 DEFINITION OF DISABILITY. If the beneficiary is the grantor’s disabled child, the grantor may transfer funds to the trust without penalty at any time, provided that the beneficiary continues to be disabled. If the beneficiary is not the grantor’s disabled child, the grantor may transfer funds to the trust without penalty until the beneficiary turns age 65, provided that the beneficiary continues to be disabled. Anything added to the trust after the beneficiary turns age 65 is a divestment (see SECTION 17.2.7.18 TRUSTS FOR DISABLED INDIVIDUALS ESTABLISHED OR FUNDED AFTER THE BENEFICIARY TURNS 65). Note Unlike special needs and pooled trusts, trusts for disabled individuals are not required to have any type of Medicaid "payback provision" that becomes effective upon the death of the beneficiary. Third-party trusts for disabled individuals in Wisconsin include, but are not limited to: • WisPACT Trust II • Life Navigators Community Trust I A trust for disabled individuals can also be a freestanding irrevocable trust with a private trustee, as long as it meets the conditions above. 17.2.6.3 Divestment by the Community Spouse After Five Years The transfer of assets (e.g., liquid, homestead, etc.) by a community spouse more than 60 months (five years) after the institutionalized person was determined eligible is an allowed divestment and doesn’t result in a penalty period or impact eligibility for the institutionalized spouse. Example 6 Chu is married and applied for Medicaid when he entered a nursing home. He was determined eligible for institutional Medicaid. Six years after Chu became eligible, Edith, Chu’s community spouse, gave $30,000 to her nephew. This divestment is allowed and doesn’t result in a penalty period.

Example 7 When Chu applied for institutional Medicaid, he and Edith owned a home together. After Chu became eligible, he transferred complete ownership of the home to Edith. When Chu had been eligible for institutional Medicaid for five years, Edith transferred the homestead property to someone else for less than fair market value. Chu's eligibility was not affected. This divestment is allowed and doesn’t result in a penalty period. Edith applies for Long Term Care services two years later. Her transfer of the homestead property is in her look back period and must be evaluated by the agency for divestment. 17.2.6.4 Divorce or Separation Action The division of property as part of a divorce or separation action is an allowed divestment and doesn’t result in a penalty period.