How Do I Create a Miller Trust?
- State: AZ #25310
I am applying for ALTCS and need to set up a Miller's Trust. Local attorneys charge about $500 for this. Can I file this myself without an attorney? If so do you have directions and a template and if so how much? Thanks.
As you may know, a Miller Trust makes Social Security and other income exempt from calculations of income and resources if the state is reimbursed from the trust for Medicaid expenses upon the recipient's death. In this situation, the applicant assigns all of their non-exempt income to an irrevocable trust. The trust pays out the maximum allowable amount of income to the applicant, withot losing their eligibility. This income is paid directly to the Medicaid recipient's nursing home and the excess income stays in the trust. Medicaid picks up the tab for the portion of the nursing home bill that exceeds the maximum acceptable income and any income left in the trust is used to pay back the state upon the death of the recipient. Such an income diversion trust is also now called a Qualifying Income Trust (QIT). Upon the person's death, any funds remaining in the Miller Trust are transferred to the state as reimbursement for the amounts paid out by the state as Medicaid benefits.
Purpose of a Miller Trust
A Miller Trust solves a single problem. The problem is that the person applying for ALTCS (Medicaid) has too much income. A Miller Trust is not useful for any other purpose.
Directing Income into the Miller Trust
The term “Miller Trust” is an informal name. A more accurate name for this trust is an “Income Cap Trust”. It has also been called an “Income Assignment Trust”. This is because, after the trust is created, the patient assigns his or her right to receive social security and pension to the trust.
In the eyes of ALTCS, if the Miller Trust is receiving income, the patient is not receiving that income. This is how the patient solves the excess income problem. ALTCS no longer requires that the patient attempt to assign all income from all sources into the Miller Trust.
Assigning less than all income into the Miller Trust If the patient is going to be receiving care at home, and not in an institution, it is recommended that the patient assign only so much income into the trust as will render him or her income eligible. This is because the patient incurs no share of cost obligation when he receives his care at home. Those funds then accumulate in the Miller trust which must be paid back to ALTCS upon the patient's death to reimburse the program for the patient's accumulated cost of care.
As an example, Mr. Berry receives his care at home. He has Social Security of $800 per month and a pension check from his union for $900 per month. He should assign only his social security into the trust.
Social Security always cooperates with such requests. However, some pension payers do not always cooperate with requests to assign income into a Miller Trust. Fortunately, ALTCS will consider the patient to be income eligible provided that the total of income received by the patient outside the Miller Trust does not exceed $1,737.00. In most instances, it is the Social Security alone that puts the patient over the income cap.
If the patient is receiving care in a nursing home or in an boarding home, there is no apparent advantage to keeping certain income items out of the Miller Trust. This is because ALTCS assesses a share of cost which will prevent substantial funds from accumulating in the Miller Trust.
Who can create a Miller Trust?
What if the patient is too disabled, physically or mentally, to sign a trust? If the patient has previously made a power of attorney for finances, the agent under that power of attorney can create the Miller Trust. ALTCS is liberal in permitting this, even if the power of attorney does not explicitly authorize the creation of a Miller Trust. If the patient is too disabled to understand that he or she is creating a trust, and if the patient has not granted a financial power to another, it will be necessary to obtain court conservatorship in order to create the Miller Trust.
Establishing the Miller Trust Bank Account Once the Miller Trust is created and signed by the patient or the patient’s agent under Power of Attorney, the next step is to create a bank account in the name of the trust. The tricky part is that the bank account cannot have an opening balance. Most banks hate this requirement and may not accommodate you. Once the bank account is opened in the name of the trust, the next step is to write social security and the pension payers and ask them to direct deposit future checks into the bank account.
How are the funds in the Miller Trust spent?
When money begins to flow into the bank account, complex ALTCS rules govern how it is to be spent.
If all of the patient’s income flows into the trust, the trustee may retain a personal needs allowance for the patient. The trustee may pay the ALTCS approved Minimum Monthly Maintenance Needs Allowance to the community spouse. The trustee may and must pay the patient’s share of cost (if the patient is not at home). The trustee may, with ALTCS approval, pay the administrative fees associated with the trust.
When the patient dies, any money remaining in the Miller Trust must be remitted to the ALTCS program.
Miller Trust Timing Issues
You do not want approval of ALTCS eligibility to be slowed by submission of your Miller Trust. For this reason, we recommend that at the time you submit your Miller Trust to the eligibility worker, you do two other things. First, obtain from the eligibility worker a form that notifies ALTCS what you expect will be the monthly income and expenses for the trust and fill it out a and submit it immediately. Second, if you are going to assign the patient's social security into the trust, and the patient cannot request that assignment himself, you will need to become social security representative payee through the Social Security Administration. Request that status without delay. The form may be found at the following site:
Representative Payee Form:
Please see the information at the following links:
Please see the forms at the following links:
08/10/2011 - Category: Trusts - State: AZ #25310
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