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Effective: December 1, 2006 |
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19.25.35.25ar1 - Trusts Established Before August 11, 1993 (Archive) |
Archived: February 1, 2010 |
Trusts established before August 11, 1993 have different policy provisions than those established on or after that date.
Determining Value - Available, Counted or Excluded.
MinnesotaCare, MA Method A and GHO.
Determining Value - Available, Counted or Excluded
To determine availability of a trust established before August 11, 1993, apply the policies below in the following order:
l Exclude the trust corpus from the asset total if the trust is an excluded Supplemental Needs Trust. See Supplemental Needs Trusts for more information on how these trusts are identified and value is determined.
l Revocable Trusts: consider the trust corpus and any undisbursed income of a revocable trust as available and count the value toward the asset total.
Note: The undisbursed income is any amount that could be paid out under the terms in the trust but that remains in the trust.
l Client Created Trusts (also called Medicaid Qualifying Trusts):
n Consider this type of trust as either unearned income or an asset, based on whether the trustee disburses funds.
n Count toward the asset total the maximum amount of undisbursed funds that the trustee could disburse in the six-month certification period if he or she used full discretion. This may include any trust corpus and/or trust income that the trustee could, but does not, disburse.
Exception: Do not count the undisbursed funds if it meets one of the criteria below:
m The trust was set up before April 7, 1986 solely to benefit a client with mental retardation living in an ICF/MR.
m The trust was created by a will.
m The trust is a Zebley Trust created with retroactive SSI benefits for a person with disabilities.
l Other Trusts.
The counted value, excluded value and availability of other trusts that do not meet the first three types of trusts listed above have different criteria depending on program.
See program provisions within this section for more information.
Some trusts have provisions, known as exculpatory clauses, which limit trust benefits to the beneficiary or divert trust benefits to someone else if the beneficiary applies for or becomes eligible for public assistance, including MA.
l Such provisions in most trusts created in Minnesota on or after July 1, 1992, are unenforceable. This includes trusts set up in a will with the client as beneficiary.
l Supplemental Needs Trusts are exempt from these restrictions.
l Request a county attorney opinion, or follow your agency's HealthQuest procedures for a determination regarding availability.
Example:
Mr. Williams executed his will on January 2, 1991. The provisions of the will put his estate into trust for his wife, with the provision that the trust benefits be diverted to their son if his wife becomes eligible for public assistance. Mr. Williams died on March 5, 1993. His wife entered a nursing home on September 5, 1997. Because the trust was created by a will executed before July 1, 1992, the provision diverting benefits to the son is probably enforceable.
Action:
Request a determination from the county attorney or HealthQuest.
Example:
Mr. Stevens placed most of his assets in a trust naming himself as beneficiary on June 5, 1994. The trust instrument contains a provision that the funds will become unavailable to Mr. Stevens unless approved by a trustee if he becomes eligible for public assistance. Mr. Stevens enters a nursing home on February 15, 1998. The trustee states that no funds will be made available for Mr. Steven's medical care.
Action:
Because the trust was created after July 1, 1992, this provision is unenforceable. Request a determination from the county attorney or follow your agency's procedures to submit a policy question to HealthQuest.
MinnesotaCare, MA Method A and GHO
The client needs to contact the trustee to determine whether any trust funds are available, if both of the following are true:
l The trust does not meet the first three types listed in Determining Value - Available, Counted or Excluded.
l The trust was established by a third party not using the assets or income of the client.
Approve or continue eligibility while the client is contacting the trustee. Consider the trust funds unavailable and do not count toward the client’s asset total until the client gains access to the funds.
l Applicants have 30 days from receipt of the agency’s written request, or until the end of the month of application, whichever is later, to begin this action.
l Enrollees have 30 days from the date of the agency’s written request to begin this action.
Consider the trust corpus to be unavailable if:
l The trust does not meet the first three types listed in Determining Value - Available, Counted or Excluded.
l The trust was established by a third party not using the assets or income of the client.
l The client's access is restricted. Restricted access means only a trustee can withdraw funds from the trust corpus.
A client who is a beneficiary entitled to trust income must contact the trustee to determine if the trustee will disburse trust income to him or her.
Note: Approve or continue eligibility while the client is contacting the trustee.
The amount of trust income to count varies depending on the type of trust.
l Revocable Trusts.
Count any income paid to the client from the trust as unearned income in the month the client receives the income.
l Client Created Trusts (also called Medicaid Qualifying Trusts).
Count the amount the trustee actually disburses from this type of trust as unearned income in the month it is received.
l Other Trusts.
n For MinnesotaCare, MA Method A and GHO:
Count as unearned income any amount the client actually receives.
n For MA Method B and GAMC:
Trust income is unavailable until it is disbursed. It is unearned income in the month of receipt. See Categories of Income.
Follow asset verification policy for verifying trusts. See Verification of Assets.