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Effective: February 1, 2010 |
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19.25.35.05ar2 - Identifying Types of Trusts (Archive) |
Archived: May 1, 2010 |
A trust may be established for a variety of reasons, including:
l To transfer assets to heirs without the need to go through a probate court.
l To make a relative or other individual (such as a disabled individual) the beneficiary of a trust to provide for the individual’s future support needs.
l To allow certain income and assets to be disregarded for MHCP eligibility purposes. Examples: Special Needs Trust and Pooled Trusts.
Determining How to Treat a Trust.
Special Needs Trust or Pooled Trust.
Third Party Established and Funded Trusts.
Determining How to Treat a Trust
Treatment of a trust varies depending on the type of trust. Factors used to determine how to treat a trust include:
l When the trust was established;
l Who established the trust; and
l Whose income or resources were used to fund the trust.
The following information provides general guidelines to help identify the type of trust to evaluate .
A trust is probably a Client-Funded Trust if it is:
n established on or after August 11, 1993;
n not established by will; and
n funded with the income and/or assets of the MA client and/or client’s spouse.
A trust is probably a Medicaid Qualifying Trust (MQT) if it is:
n established before August 11, 1993; and
n funded with the income and/or assets of the MA client or the client’s spouse.
Special Needs Trust or Pooled Trust
A trust is probably a Special Needs Trust or a Pooled Trust if:
n It was established on or after August 11, 1993;
n The client was disabled according to SSA criteria when the trust was established;
n It is funded with the income and/or assets of client and/or client’s spouse; and
n It was not established by will.
A trust is probably a Supplemental Needs Trust if:
n It is funded by a third party grantor during the third party’s life or upon the third party grantor’s death;
n The lifetime beneficiary was a person with a disability at the time the trust was established; and
n The purpose of the trust is to supplement government benefits the beneficiary receives but not supplant (replace) government benefits.
Third Party Established and Funded Trusts
A trust is probably established and funded by a third party if
n Funded by a third party grantor during the third party’s life or upon the third party grantor’s death; and
n The trust does not meet all of the guidelines listed above for a Supplemental Needs Trusts.
A trust is probably a Zebley trust if it:
n Was established on or after 1990;
n Is funded with payment made to the client by SSA pursuant to the United States Supreme Court Decision, Sullivan v. Zebley, 493 U.S. 521,110 S.Ct. 885 (1990).