1625.85.00 TRUSTS

A trust is a right of property held by one party for the benefit of another. The individual who holds the legal title to property for the benefit or use of another is the "trustee." The individual for whose benefit the trust is created is the "beneficiary."

While most trusts recognized as binding under state law are established by means of a written document, some states also recognize oral trust agreements.

1625.85.15 Trust (MA-AFDC,MA-SSI,SFP)

(07-01-95) This policy does not pertain to the MA-AFDC groups that correspond to the direct assistance groups, the under $10 payment assistance groups, and the assistance groups who opt not to receive direct assistance. (Those groups use AFDC trust policy, 1625.85.00.)

A TRUST is a right of property held by one party for the benefit of another. The term "trust" also includes any legal instrument of devise that is similar to a trust. It does not cover trusts established by will. It can include (but is not limited to) escrow accounts, investment accounts, pension funds, and other similar devises managed by an individual or entity with fiduciary obligations.

The TRUSTEE is the individual who holds the legal title to and manages property for the benefit or use of another. The BENEFICIARY is the individual for whose benefit the trust is created.

A trust is considered REVOCABLE if the trust can be dissolved; it is considered IRREVOCABLE if it cannot be dissolved.

It is important to understand other terms used in reference to trust:

- Grantor (Trustor/Settlor): Sets up the trust.

- Trustee: Manages the trust.

- Beneficiary: Receives benefits from the trust.

- Corpus/Principal: Resources or income used to establish the trust.

- Distributions/Disbursements: Money or resources paid out of the trust (either from the corpus or income produced by the corpus).

Refer to policies in 1625.85.15.10 through 1625.85.15.40 to determine how to consider trust funds.

1625.85.15.10 How to Analyze Trusts (MA-AFDC,MA-SSI)

(07-01-95) How to count funds held in a trust--whether as income or resources--depends on several factors:

- who created the trust;

- when it was created;

- whether the trust is revocable or irrevocable; and

- the conditions and terms of the trust.

1625.85.15.11 Trusts Set Up By Others (MA-SSI)

(10-01-95) For trusts that are established by someone other than the individual, individuals spouse or representative, the trust must be evaluated according to these SSI policies:

- If the individual does not have authority to revoke or direct use of the trust, it is not a resource to him. Conversely, if the individual has the authority to revoke or direct use of the trust, the corpus of the trust is considered a resource to him.

- Cash paid directly from the trust to the individual is unearned income.

- Disbursements made by the trustee directly to a third party are not considered income to the individual.

The above policies also apply to trusts established by a will.

Refer to sections 1625.85.15.20 and 1625.85.15.30 for information on how to treat trusts established by the individual, individuals spouse or representative.

Legal Basis: 1OC-8.014 FAC and 20 CFR 416.1201.

1625.85.15.20 Medicaid Qualifying Trusts Before 10/93 (MA-AFDC,MA-SSI)

(07-01-95) Per 1OC-8.0182 FAC, the following policy applies only to those trusts established before 10-01-93.

A Medicaid qualifying trust is a trust or similar legal device (other than through a will) created by an individual, his spouse, or legal representative under which (a) the individual may be the beneficiary of all or part of the payments from the trust, and (b) the amount of the distribution is determined by one or more trustees who are permitted to exercise any discretion with respect to the amount to be distributed to the individual.

NOTE: The term "Medicaid qualifying trust" (MQT) must not be confused with the term "qualified income trust". The MQT refers to some trusts established prior to 10/l/93 which disqualified individuals for Medicaid, while the "qualified income trust" refers to certain income-only trusts permitted on or after 10/l/93 which allow individuals to qualify for ICP or HCBS.

If the trust meets the definition of a Medicaid qualifying trust, consider the maximum distribution that could be paid to the applicant/recipient by the trustee(s) as an available resource and income to the individual whether or not the distribution is made. These policies apply even if the trust is irrevocable, regardless of the purpose of the trust or whether or not the trustee(s) actually exercise their discretion.

If the trustee has no or limited discretion or ability to disburse funds to the individual, the amount that is unavailable must be considered a transfer of a resource without fair compensation and must be evaluated under transfer of asset policy if it was established within the applicable transfer look-back period.

1625.85.15.21 Exceptions for Trusts Before 10/01/93 (MA-AFDC,MA-SSI)

(07-01-95) Per FAC 10C-8.0182, the following trusts are exempt from the Medicaid qualifying trust provisions:

- Trusts set up by a family member (other than the individual or spouse) under the State of Florida Umbrella Trust Agreement for developmentally disabled or mentally ill individuals in accordance with Florida Administrative Code 10-19. Any money given to the beneficiary by the trustee would be considered as income.

- "Individual trusts" when the beneficiary is a mentally retarded individual who resides in an ICF/DD, provided the trust or initial trust decree was established prior to April 7, 1986 and is solely for the benefit of that mentally retarded individual.

- Trusts established by will.

1625.85.15.22 Undue Hardship/Trusts Set Up Before 10/93 (MA-AFDC,MA- SSI)

(07-01-95) Per FAC 1OC-8.0182, if undue hardship exists, only the amount of the trust that is ACTUALLY made available as income or resources is counted. Undue hardship is defined as any situation in which an individual may be forced to go without life sustaining services because the proceeds from a trust fund are not available to the individual. This may be due to legal restrictions or illegal actions by the trustee. All undue hardship decisions must be reviewed and approved by the district program specialist.

1625.85.15.30 Trusts Established On or After 10/l/93 (MA-AFDC,MA-SSI)

(07-01-95) The following policy applies to trusts established by an individual on or after 10-01-93. This is based on 42 USC 1396p(d).

An individual will be considered to have established the trust if assets of the individual were used to form all or part of the corpus of the trust AND if any of the following individuals established the trust (other than by will):

- the individual;

- the individuals spouse;

- a person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individuals spouse; OR

- a person, including a court or administrative body, acting at the direction or upon request of the individual or individuals spouse.

If the trust was not established by one of the above individuals, refer to section 1625.85.15.11.

If the trust is REVOCABLE:

- Consider the entire principal as an available resource to the individual.

- Consider any payments which can be made as countable income to the individual.

- Consider any other payments from the trust as assets disposed of by the individual without fair compensation.

If the trust is IRREVOCABLE and there are any circumstances under which payment from the trust could be made to or for the benefit of the individual:

- Consider that portion of the principal that could be available, as a resource to the individual.

- Consider payments from that portion of the principal which could be available as income to the individual.

- Consider any other payment from the trust as a transfer of assets.

If the trust is IRREVOCABLE and no payment could be made from the trust under any circumstances:

- Apply the TRANSFER OF ASSETS policy to the individuals resources and income used to establish the trust. The transfer policy applies only to applicants or recipients of nursing facility services and HCBS.

- The trust is not counted as an available resource.

- The above policies apply without regard to:

- the purpose of the trust;

- whether the trustees have or exercise any discretion under the trust;

- any restrictions on when or whether distributions may be made from the trust; or

- any restrictions on the use of distributions from the trust.

For more information on transfer of assets for SSI-related Medicaid, see 1630.20.00.

1625.85.15.31 Exceptions for Trusts Set Up 10-93 or Later (MA-SSI)

(10-01-95) The policies listed in above in Section 1625.85.15.30 do not apply to the following trusts:

- trusts established by a will (see 1625.85.15.11).

- trusts for the disabled under age 65.

- pooled trusts for the disabled.

- qualified income trusts (See 1805.15.20).

All special trusts must be forwarded to the district program office for review and district legal counsels written approval before the case can be approved.

The following special trusts may be created on or after October 1, 1993 for disabled individuals if the trust meets the specific criteria indicated below:

TRUSTS FOR THE DISABLED UNDER 65: A trust containing the resources of a disabled individual under age 65, if:

- it was established on or after 10-01-93; AND

- it was established for the benefit of the individual by a parent, grandparent, legal guardian or a court (CANNOT be established by the disabled individual himself, must be by parent, grandparent, legal guardian or court order); AND

- the trust stipulates the State will receive the balance in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual.

POOLED TRUSTS FOR THE DISABLED: A trust containing the resources of an individual who is disabled, if:

-it was established on or after 10-01-93;

-the trust is established and managed by a non-profit association;

- a separate account is maintained for the beneficiary of the trust but, for purposes of investment and management, the trust pools the accounts;

- the trust is established solely for the disabled individual by a parent, grandparent, legal guardian, court or the individual himself; AND

- to the extent that amounts remaining in the trust upon the individuals death are not retained by the trust, the trust pays to the State an amount equal to the total amount of medical assistance paid on behalf of the individual.

Both of the above special trusts can only be set up to benefit individuals who meet SSI disability criteria. Trusts for the disabled under 65 can be established only for individuals who are under 65. Pooled trusts for the disabled can be established for individuals of any age.

Disability must be determined for both of the above special trusts via regular policy; that is, the person must receive Social Security disability or SSI benefits or the agency must make an independent determination to show that the individual meets the disability requirement.

Legal Basis: 42 U.S.C. 1396p(d)(4)

1625.85.15.31.05 Treatment of Qualified Disabled Trusts (MA-SSI)

(10-01-95) After the trust is approved by DLC as meeting the criteria of a qualified trust for the disabled under age 65 or a pooled trust, apply the following policies to determine the individuals eligibility for Medicaid benefits:

- Do not consider the corpus of the exempt trust as a resource to the individual beginning with the month the resources are placed into an executed qualified disabled trust or pooled trust;

- Do not consider the funding of a qualified disabled or pooled trust as a transfer of resources or income subject to imposition of a penalty period, provided disbursements are for the sole benefit of the disabled individual (refer to 1630.20.12);

- Do not count any income deposited into the trust as income to the individual when determining the individuals eligibility;

- Do not consider disbursements from the trust to third parties as income to the individual;

- Do not consider any income earned by the trust which remains in the trust as income to the client;

- Count any payments made directly to the client as income to the client;

- Count all income placed into the trust (along with countable income outside the trust) when computing patient responsibility. Standard spousal impoverishment policies apply.

If income is deposited into the trust, the trustee must provide quarterly statements identifying the deposits (and disbursements) made to the trust for each month.

Any funds paid directly to the individual from the trust must be counted as income to the individual. Disbursements not paid to the individual are not counted as income to the individual.

Send a copy of the approved qualified disabled or pooled trust to the following address:

Estate Recovery Section
Florida Medicaid
P.O. Box 13825
Tallahassee, Florida 32317-3825

When you receive inquiries regarding the settlement of remaining funds in the trust after a client's death, tell them to make checks payable to Florida Medicaid and send to the above address. Also advise them to clearly identify the client by including a note with the client's full name and social security number or Medicaid number.

Legal Basis: 42 U.S.C. 1396p(d)(4)

1625.85.15.32 Undue Hardship/Trusts Set Up 10/93 or Later (MA-SSI)

(10-01-95) If undue hardship exists, only the amount of the trust that is actually made available as income or resources is counted.

Undue hardship exists when application of the trust provision would deprive an individual of food, clothing, shelter or medical care such that his life or health would be endangered. All efforts to access the assets (including resources and income) must be exhausted before this exception applies. All undue hardship decisions must be reviewed and approved by the district program specialist.

1625.85.15.40 Verification (MA-SSI)

(10-01-95) A copy of the trust document must be reviewed carefully to determine the trustee's ability to use the principal. When appropriate, the Public Assistance Specialist should request an official legal interpretation.

All OBRA 193 special trusts (trusts for disabled under 65, pooled trusts and income trusts) must be forwarded to your district program office who will refer it to your district legal counsel for review and approval.

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