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Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is required. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The following policy applies to trusts without regard to:
- the purpose for which the trust is established;
- whether the trustee, or similar person or entity, has or exercises any discretion under the trust;
- any restrictions on when or whether distributions can be made from the trust; or
- any restrictions on the use of distributions from the trust.
This means that any trust which meets the basic requirements outlined in previous sections can be counted in determining eligibility for Medicaid. No clause or requirement in the trust, no matter how specifically it applies to Medicaid, or other federal or state programs (that is, an exculpatory clause), precludes a trust from being considered under the rules of this section. While exculpatory clauses, use clauses, trustee discretion or restrictions on distributions do not affect a trust's countability, they do have an impact on how the various components of specific trusts are treated.
F-6610 Payments from a Trust
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
Payments to or on behalf of the person:
Payments are considered to be made to the person when any amount from the trust, including an amount from the corpus or income produced by the corpus, is paid directly to the person, or to someone acting on his behalf, such as a guardian or legal representative.
Payments made for the benefit of the person are payments of any sort, including an amount from the corpus or income produced by the corpus, paid to another entity so that the person derives some benefit from the payment. For example, such payments could include purchase of clothing or other items, such as a radio or television for the person. Such payments could also include payment for services the person may require, or care, whether medical or personal, that the person may need. Payments to maintain a home would also be payments for the benefit of the person.
A payment to or for the benefit of the person is counted under trust provisions only if such a payment is ordinarily counted as income. For example, payments made on behalf of a person for medical care are not counted in determining income eligibility. Thus, such payments are not counted as income under the trust provision.
Circumstances under which payments can or cannot be made:
In determining whether payments can or cannot be made from a trust, any restrictions on payments, such as use restrictions, exculpatory clauses or limits on trustee discretion that may be included in the trust, must be considered.
Example: If the trust provides that the trustee can disburse only $1,000 out of a $20,000 trust, only the $1,000 would be treated as a payment (disbursement) that could be made. The remaining $19,000 would be treated as an amount that cannot, under any circumstances, be paid to or for the benefit of the person.
When a trust provides, in some manner, that a payment (disbursement) can be made, even though that payment (disbursement) may be sometime in the future, the trust is treated as providing that the payment (disbursement) can be made from the trust.
Example: If a trust contains $50,000 that the trustee can pay to the person only in the event that the person needs, for example, a heart transplant, the full amount would be considered as payment (disbursement) that could be made under some circumstances, even though the likelihood of payment (disbursement) is remote.