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

2.3.3.2.7.9.2 Client-Funded Trusts

Client-funded trusts are trusts funded with the income and assets of the person and/or the person’s spouse. A client-funded trust must be evaluated for people with an asset limit to determine whether the trust is available to contribute toward the person’s health care needs.

Trust Characteristics

A client-funded trust must meet all of the following criteria:

Not established by will;
Funded with the assets or income of the person or the person’s spouse;
Established by one or more of the following; and:
- The person
- The person’s spouse
- A person, including a court or administrative body, with legal authority to act in place of or on behalf of the person or the person’s spouse
- A person including any court or administrative body, acting at the direction or upon the request of the person or the person’s spouse
Established on or after August 11, 1993.

Trust Funding

Who funds the trust determines how the assets held in the trust are analyzed for purposes of determining eligibility for Medical Assistance (MA).

Funded by the Person and/or Person’s Spouse

The assets in the trust are analyzed using the availability concepts applicable to revocable and irrevocable client-funded trusts.

Funded by the Person and Any Other Person

The portion of the trust funded with assets of the person or the person’s spouse are analyzed using the availability concepts applicable to revocable and irrevocable client-funded trusts.

The portion of the trust funded with assets of any other person is not analyzed using the availability concepts applicable to revocable and irrevocable client-funded trusts. The portion of the trust funded with assets of any other person is analyzed under the availability concepts applicable to third party established and funded trusts.

Trust Availability

The availability concepts applicable to client-funded trusts apply regardless of any of the following:

The purpose for which the trust was established
Whether the trustees have or exercise any discretion
Any restrictions on when or if a distribution may be made from the trust
Any restrictions on the use of the distributions from the trust.

How a specific trust is evaluated for eligibility purposes depends on the characteristics of the trust.

Revocable Client-Funded Trusts

A revocable client-funded trust is any trust that:

Can be revoked by the grantor
Provides that the trust can only be modified or terminated by a court
Is called irrevocable but contains language that allows it to terminate if some action is taken by the grantor

Trust Principal (or Assets)

The entire value of the trust principal is an available asset.

Disbursements

Any payments from a revocable client-funded trust to or from the benefit of the person or the person's spouse is income to the individual in the month received.

Any payment from the trust to a third party not for the benefit of the person or the person's spouse is a transfer of assets. See 2.4.1.3 MA-LTC Uncompensated Transfers.

Irrevocable Client-Funded Trusts

An irrevocable trust is a trust that cannot be revoked by the grantor in any way.

Availability of Trust Assets

If there are any circumstances under which payment from the assets could be made to or for the benefit of the person or their spouse, the portion of the trust assets from which payment could be made is available and counted in the asset evaluation.

Trust assets are available to the extent the terms of the trust provided that the trustee can do any of the following:

can or must make disbursements, including loans or gifts, to the person or spouse;
has complete power, authority, or discretion over whether to make disbursements to the person or spouse;
can make disbursements to the person or spouse only if a specific even occurs, even if the event has not yet occurred or even if the event is unlikely to occur; or
can make disbursements to benefit the person or spouse even if the trustee cannot make payments directly to these individuals.

For example:

the trustee could purchase an asset for the person or spouse to use; or
the trust owns property that the person or spouse resides on, and the trustee could pay for expenses for upkeep of the property.

Availability of Trust Income

If there are any circumstances under which payment from trust income could be made to or for the benefit of the person or the person's spouse, the income (including accumulated income that may have been reinvested in the trust) is available.

Depending on the specific terms in the trust, income earned by the trust assets may be available while trust assets are unavailable.

Unavailable Trusts

If there are NO circumstances under which payment from a client-funded irrevocable trust (or a portion of that trust) could be made to or for the benefit of the person or the person's spouse, the trust (or portion thereof) is unavailable and not counted.

An unavailable trust must be evaluated to determine if an uncompensated transfer occurred during the 60-month lookback period or during enrollment in MA-LTC when the trust was established or when the person or the person's souse made additions to the trust. See 2.4.1.3.4 MA-LTC Other Asset Transfer Considerations

Disbursements

Any payment from available trust assets or income directly to or for the benefit of the person or the person's spouse is income to that individual in the month received. Any payment from available trust asset or income that does not benefit the person or their spouse must be evaluated to determine if an uncompensated transfer occurred for MA-LTC.

Client-Funded Trusts for People with a Disability

The availability concepts do not apply to trusts that meet the statutory requirements for Special Needs or Pooled Trusts. See the specific sections to evaluate the availability of assets held in a Special Needs Trust or Pooled Trust.

Legal Citations

Minnesota Statutes, section 256B.056, subdivision 3b

United States Code, title 42, section 1396p(d)