Primer on Miller Trusts

Primer on Miller Trusts

Presented to REAL Services, Inc., July 20, 2012

© Copyright 2012, Douglas D. Germann, Sr. PC, Elder Caring Attorney
Questions? Call Doug at 574/291-0022, or contact him at
[email protected] or fax 574/291-0024
www.SouthBendElderCARINGlaw.com

Starting points

1. Rare:
   1. Waivers
   2. Income above 3 times SSI limit $698 X 3 = $2094 in 2012 (Special Income Level, SIL)
2. Why?
   1. If above the SIL, must spend down to the SSI limit
   2. If income is $2000 per month, no spend down; if $2100, spend down is $1402
3. Irrevocable—but can reserve ability to amend
4. Called:
   1. Miller Trust
   2. Qualified Income Trust
   3. Income Cap Trust
   4. Income Assignment Trust
   5. (d)(4)(B) Trust (42 USC 1396p(d)(4)(B))

Parties

5. Settlor/Grantor: Recipient or applicant
6. Beneficiary: Recipient, spouse (to extent of Minimum Maintenance Allowance)
7. Trustee: Adult child, caregiver, but usually not the recipient

Show me the money

8. Money in:
   1. If all, then immediately distribute $2094 to recipient
   2. If only that above $2094, then hold
   3. Only the recipient’s income + interest
   4. Nothing else
   5. No one else’s money
   6. Goes in after having been received by recipient; cannot be assigned ahead of time
   7. Not considered a transfer violation
   8. Cannot accumulate indefinitely (funds in the Trust do not count against the $1500 maximum)
   9. Good to do by automatic transfer within the bank (need to change annually or whenever income changes)
9. Money out:
   1. Funds if any remaining at death go to state to repay
   2. For sole benefit of spouse (spousal allocation will be established)
      1. Only while the trust exists
      2. Trust cannot be terminated and distributed to any other entities for any purpose
   3. Health insurance premiums, including Medicare supplement
   4. Medical expenses not covered by MA
   5. OTC medicines if Doctor note
   6. Medical care including HCBS and NH
   7. Old medical bills for past services from before time on MA (but if MA budgeted for it out of the prior month’s income ($2094), do not pay out of the Miller Trust)
   8. Assisted living
   9. Administration, legal fees
   10. Rx copayments
   11. Medical equipment, if we can prove medically necessary (but why didn’t MA pay for it?)
   12. Trustee fees
   13. Funeral expenses probably
   14. Payments out stop at death, so it is best to pay the bills as they come in
   15. Bank service charges

What we need to show Medicaid

10. What the caseworker needs to see
    1. Copy of the signed trust
    2. Verification that the bank account has been opened
    3. Records of every penny in and every penny out
    4. Receipts, invoices
    5. Doctor notes, such as for over the counter meds

Administration

11. Name on account: “[client] Qualified Income Trust”

12. Income taxes:
    1. Separate EIN or beneficiary’s SSN?
    2. The Grantor is taxed on all income generated by this trust, and all income placed in the trust
    3. Make sure CPA or tax preparer is aware of the trust and all its transactions each year
13. Termination:
    1. Death of recipient
    2. Termination of waiver services with no likelihood of resuming
    3. Pay to state
14. When to establish?
    1. When the person is eligible, that is has assets below $1,500

Other matters

15. No co-mingling of other money: not from Grantor, not from Trustee, not from any other person or source
16. The amounts to go into the Miller Trust will usually change annually, and any time there is a change in income
17. Grantor may not write checks: only the Trustee has this authority
18. Two separate bank accounts: Recipient’s own; Miller Trust’s