Medical Assistance for People Who Are Age 65 or Older or People Who Are Blind or Have a Disability

2.3.3.2.7.9.6 Third Party Established and Funded Trusts (Archive)

A trust can be established and funded by a person (third party grantor) other than the person or the person’s spouse applying for Medical Assistance (MA) for the benefit of the person applying for MA during the grantor’s lifetime or under the grantor’s will.

A trust established under a third party grantor’s will is called a testamentary trust. A testamentary trust is established at the time of the grantor’s death, rather than at the time the will was created. However, if the beneficiary is entitled to any part of the corpus or income under the terms of the trust, it may not be available until the grantor’s estate is settled.

A trust funded by a third party during his or her lifetime is called an inter vivos or living trust.

Trusts funded by a third party that meet the requirements of a Supplemental Needs Trust are evaluated under the policy for Supplemental Needs Trust, not under Third Party Trust policy.

Trust Availability

The availability concepts applicable to Third Party Funded and Established Trusts depend on the type of Third Party Trust involved:

• Discretionary Trust

• Discretionary Trust with Support Standards

• Support Trust

The terms of the trust establish which type of trust is involved. 

Discretionary Trust

A discretionary trust is a trust with provisions that grant the trustee absolute discretion regarding whether distributions from the trust will be made. A discretionary trust gives the trustee complete discretion to distribute all, some, or nothing from the trust.  

Trust Corpus

If the trust provides that neither the trustee nor the court can invade the corpus to make disbursements to the beneficiary, the trust corpus is treated as unavailable to the beneficiary even when:  

• the trust can be revoked by someone other than the beneficiary or the  beneficiary’s spouse; or

• the trust provides a regular specified payment from the corpus to the beneficiary.

  • When the applicant or enrollee is a beneficiary of a testamentary trust, the maximum distribution available to the beneficiary from the trust (including provisions permitting invasion of the corpus for the beneficiary’s support and maintenance) does not mean the maximum distribution available is actually made available to the beneficiary.

The trust corpus is considered to be unavailable if the beneficiary’s access is restricted. The trust is restricted if the beneficiary cannot compel the trustee to make disbursements to the beneficiary. If the trust provisions provide that neither the trustee nor the court can invade the corpus to make disbursements to the beneficiary, the trust corpus is treated as unavailable to the beneficiary.

Distributions

Any payments made directly from the trust to the beneficiary are considered income to the beneficiary.

Discretionary Trust with Support Standards

A discretionary trust with support standards is a trust that includes trust provisions granting the trustee absolute discretion, but also includes standards of support for the beneficiary which limits the trustee’s discretion. A discretionary trust with support standards directs the trustee to distribute trust income or principal as necessary for the support and maintenance of the beneficiary.

Trust Corpus

The entire trust corpus is counted as available when the trust contains provisions permitting disbursements from the corpus for the beneficiary’s health or medical care.  

Distributions

Any payments made directly from the trust to the beneficiary are considered income to the beneficiary.

Support Trust

A support trust is a trust with provisions that direct the trustee to restrict the use of the trust for the beneficiary’s basic support needs such as food, clothing, medical care and education.

Trust Corpus

The entire corpus of a support trust is counted as an available asset.

Distributions

Any payments made directly from the trust to the beneficiary are income to the beneficiary.

Legal Citations

Minnesota statutes, section 258B.056, subdivision 1a

Published:  June 1, 2016

Archived: December 1, 2017