What Is a Miller Trust?
What is a Miller Trust?
A Miller Trust is an estate planning tool some people use when they don’t meet the criteria for Medicaid (ALTCS in AZ). It is used when their income exceeds the ALTCS income requirements, but don’t make enough to cover their medical needs. With a Miller Trust, a person assigns their right to receive excess income to the trust. Other names for a Miller Trust include Income Cap Trust, Income Only Trust and Income Assignment Trust.
Medicaid or ALTCS has an income cap of an allowable income for individuals to still qualify for the ALTCS benefit. For an individual in 2019, the income cap is $2,313.00 a month. If an individual’s monthly income exceeds this amount and they live in Maricopa, Pima or Pinal County, they can use an Income Only Trust as long as their monthly income does not exceed $7,134.44. If they live in any other county in Arizona, their monthly income cannot exceed $6,307.44 in order to be eligible.
Who is Eligible?
People who are eligible for Medicaid in Arizona may establish an income only trust account. But the trust funds can only be used if the individual resides in a facility where long-term care is provided. If they are incapacitated and has a durable power of attorney, their appointed agent may create an Income Only Trust. Otherwise, an individual
who’s incapacitated will need to establish a conservatorship prior to creating an Income Only Trust. If the individual is married, their spouse can consent to establishing an Income Only Trust on behalf of the individual.
who’s incapacitated will need to establish a conservatorship prior to creating an Income Only Trust. If the individual is married, their spouse can consent to establishing an Income Only Trust on behalf of the individual.How Does a Miller Trust Work?
Typically, a trustee is appointed to handle a Miller Trust. This is due to most individuals need of long-term care are/will become incapable of making reasonable financial decisions. This being the case, a trustee is designated and a bank account opened in the name of the trust. This account will serve as the place where excess funds will be deposited.
Individuals with ALTCS can direct all of their income to the trust or a portion of it that allows them not to exceed the income cap set by ALTCS. The money direct-deposited into the Miller Trust account must be the full amount from whichever source it stems. For example, if the individual with ALTCS is directing qualifying monthly payments of $3,000 he/she receives to the trust account, then the full amount from that $3,000 deposit must go into the trust account.
Often, individuals have it set up where they forward their entire income to the Miller trust account. The trustee then has the discretion to provide the monthly personal needs amount being careful not to exceed the ALTCS income cap amount. Others may just have their social security or pension income forwarded to the account as long as they meet they income requirement.
It is important to note that only the individual’s income can be deposited into a Miller Trust. No other person’s income can be included in the account. There are sources of income excluded from the Medicaid income calculation, some of which include VA benefits, income tax refunds, and some types of annuity payments.
Trust Funds
An individual with ALTCS has to pay a share of the cost for staying at a long-term facility. This amount is calculated by ALTCS. The individual is allowed to keep a certain amount for a personal needs allowance. If the individual is married, they are allowed to share some of the income in the Miller Trust with their spouse.