Purpose: This section will assist in determining how to treat resources within trusts.

Current Policy Effective Date: November 1, 2015

Date Last Reviewed: September 18, 2015

Previous Policy: July 1, 2007

POL M805: DETERMINING TREATMENT OF RESOURCES WITHIN TRUSTS

1. Trusts Established by Client or Others May Be Considered Client Established

The client will be considered to have established a trust if any of the individuals listed below established a trust using the client’s resources:

Client. Client’s Spouse. Person, including a court or administrative body, with authority to act on behalf of client. Person, including a court or administrative body, acting at the request of the client or the client’s spouse.

2. Trust Establishment Purpose May Be Irrelevant

The purpose for which a trust is established is irrelevant except in the case of a trust established in any of the following circumstances:

Trust established by a will with the client as a beneficiary, who has no current access. In this case, the resource is exempt until the client has access. Trust established for a disabled individual under age 65. In this case, the resource is exempt. Trust established containing resources of the client and resources of any other person. In this case, the client’s resources in the trust must be considered (nonexempt).

3. Revocable Trusts and Payments Are Considered Assets or Income

The entire amount of the trust must be considered as an available resource.

Any payments from the trust to or for the client must be counted as income.

Payments from the trust for any other purpose must be considered an uncompensated transfer of resources.

4. Irrevocable Trusts and Payments Are Considered Assets or Income

Any possible distributions to or for the client must be considered countable resources

Payments from the trust to or for the client must be considered countable income.

Payments from the trust for any other purpose must be considered an uncompensated transfer of resources.

If a trust was established during the 60-month look-back period, any part of the trust that cannot be paid out under any circumstance must be considered an uncompensated transfer of resources.

If any part of the trust is available until a specific date or event occurs, the date the trust becomes unavailable must be considered as the date of the uncompensated transfer for consideration of the 60-month look-back period.

5. Resources Are Not Counted When State Is Residual Beneficiary

Resources must not be counted and transfer penalties must not be developed for trusts where the State is named the residual beneficiary. This means the State is entitled up to the amount of medical expenditures made on behalf of the individual.

6. Trusts for Disabled Individuals May Be Special Needs Trusts

A trust for a disabled individual must meet both the following criteria to be considered a special needs trust:

An irrevocable trust containing the resources and designating as the beneficiary an individual under age 65 who is disabled. Established for the benefit of the disabled individual by a parent, grandparent, legal guardian of the individual, or a court.

7. Pooled Trusts May Be Special Needs Trusts

A pooled trust must meet all of the following criteria to be considered a special needs trust:

An irrevocable trust established by a nonprofit organization. Contain a separate account for each beneficiary, but for purposes of investment and management of funds, the trust pools these accounts. Separate accounts are established solely for the benefit of a disabled individual by the individual, the parent, grandparent, legal guardian of the individual, or by a court.

8. Income Trusts (Miller Trusts) May Be Special Needs Trusts

An Income Trust (Miller Trust) must meet all of the following criteria to be considered a special needs trust:

Created for the purpose of making the income beneficiary eligible for Medicaid. Trust is irrevocable. Consists only of pension, Social Security and other income to the beneficiary listed in Schedule A. Provides for a monthly distribution equal to the income level for the applicable Medicaid group. Monthly distribution is used to pay the cost of nursing facility services or HCBS furnished to the client.