Qualified Income Trust – Miller Trust

Qualified Income Trust – Miller Trust Attorney San Antonio TX

If you’re facing the potential need for long-term care and worried about Medicaid eligibility, a Qualified Income Trust (QIT), also known as a Miller Trust, may be the solution you need. This legal tool allows individuals with income above Medicaid’s eligibility threshold to qualify for benefits by transferring excess income into the trust. At Carroll Law Group, we specialize in helping clients set up Miller Trusts, ensuring that they can access Medicaid coverage for their long-term care needs while staying in compliance with Medicaid’s stringent income requirements.

What is a Qualified Income Trust (Miller Trust)?

A Qualified Income Trust (QIT), commonly referred to as a Miller Trust, is a legal tool designed to assist individuals who have income that exceeds the Medicaid eligibility limits. Medicaid, a joint federal and state program, offers long-term care benefits to individuals with limited income and assets. However, if a person’s income exceeds the state’s Medicaid limits, they may be ineligible for assistance.

By placing the excess income into a Miller Trust, an individual can reduce their countable income to meet Medicaid’s income criteria. Essentially, the trust holds the excess income, which is not counted toward the individual’s Medicaid eligibility, while still ensuring that the funds are used for the individual’s benefit.

How Does a Qualified Income Trust (Miller Trust) Work?

A Miller Trust works by designating a portion of an individual’s income to be deposited into the trust. This trust is irrevocable, meaning the individual cannot alter its terms or access the funds once they are placed in the trust. The income placed in the QIT is excluded from the person’s total income for Medicaid eligibility purposes, allowing them to meet the income requirements for Medicaid.

The trust is subject to strict rules under Medicaid guidelines, and only certain types of income can be placed into a Miller Trust, including:

1. Pension Income: Monthly pension benefits or retirement income.
2. Social Security Income: Social Security benefits, including Supplemental Security Income (SSI).
3. Other Regular Income: Income from other sources, such as annuities or rental income, that exceeds the Medicaid income limit.

The trust can then pay for the individual’s care and other necessary expenses, including medical expenses, in accordance with Medicaid’s guidelines. The trust is typically structured to pay any remaining funds directly to the state once the beneficiary passes away, to cover any Medicaid expenses incurred during their care.

Features of a Qualified Income Trust (Miller Trust)

1. Income Limit Compliance: The primary purpose of a Miller Trust is to bring an individual’s income down to a level that complies with Medicaid’s income eligibility limits. By diverting excess income into the trust, individuals who otherwise would not qualify for Medicaid can meet the program’s financial criteria.
2. Irrevocable Structure: Once established, a Miller Trust is irrevocable. This means that the individual cannot change the terms of the trust or withdraw income from the trust once it has been deposited. The trustee, however, manages the income for the benefit of the individual and ensures that the income is used according to Medicaid’s rules.
3. Trustee Management: A qualified individual, often a family member or trusted advisor, is designated as the trustee to manage the funds in the trust. The trustee is responsible for ensuring that the trust complies with Medicaid rules and that the income is appropriately used for the individual’s benefit.
4. State Payments After Death: After the Medicaid recipient passes away, any remaining funds in the trust are typically paid to the state of Texas to recover the cost of the Medicaid benefits provided during the individual’s lifetime. This repayment is subject to Medicaid estate recovery rules.

Benefits of a Qualified Income Trust (Miller Trust)

1. Medicaid Eligibility: The most significant benefit of a Miller Trust is that it allows individuals to qualify for Medicaid when their income exceeds the allowable limit. This is especially important for individuals who need long-term care but do not have sufficient assets to pay for care out-of-pocket.
2. Preservation of Financial Stability: By placing excess income into the trust, individuals can still qualify for Medicaid while preserving other financial resources. This provides access to essential care without depleting the individual’s savings or assets.
3. Ensuring Access to Long-Term Care: For those who require nursing home care or other forms of long-term care, a Miller Trust provides a pathway to access Medicaid benefits. This can help cover the high costs of medical care and services that may otherwise be unaffordable.
4. Estate Planning Considerations: Establishing a Miller Trust also ensures that individuals have a clear plan in place for managing excess income in the context of their broader estate plan. This trust can work in conjunction with other estate planning tools to ensure that the individual’s financial and medical needs are addressed.

Establishing a Qualified Income Trust (Miller Trust) in Texas

Setting up a Qualified Income Trust (Miller Trust) in Texas involves several steps, and it must be done correctly to comply with Medicaid regulations. At Carroll Law Group, we guide clients through the process, which typically includes:

1. Drafting the Trust Agreement: A qualified attorney drafts the trust document, ensuring it meets all Medicaid requirements and includes the necessary provisions for income management, disbursements, and Medicaid recovery.
2. Choosing a Trustee: The individual or family must select a trustee who will manage the trust according to the terms of the agreement. The trustee is responsible for ensuring compliance with Medicaid’s rules, which includes paying Medicaid for any care costs after the individual’s death.
3. Depositing Excess Income: Once the trust is established, the individual deposits their excess income into the trust. This can include Social Security, pension income, or other sources of regular income that exceed the Medicaid eligibility limits.
4. Ongoing Trust Administration: The trustee must manage the trust and ensure that all distributions comply with Medicaid’s rules. This includes paying for the beneficiary’s care or making payments to the state if required.

Considerations and Limitations of a Miller Trust

While a Miller Trust offers a solution for Medicaid eligibility, there are several important considerations:

1. Limited Use of Funds: The funds in a Miller Trust must be used in accordance with Medicaid rules. Excess income cannot be withdrawn for personal use by the beneficiary, and the trust must be used primarily for the individual’s care.
2. Complexity of Administration: While the trust offers clear benefits, it can also be complex to administer, especially when ensuring compliance with Medicaid regulations. Working with an experienced attorney is crucial to ensure the trust is properly managed.
3. Medicaid Estate Recovery: Any funds remaining in the trust at the time of the beneficiary’s death are typically subject to Medicaid estate recovery, meaning that the state may claim the funds to cover Medicaid expenses incurred during the individual’s care.

Questions About Qualified Income Trusts? Contact Carroll Law Group Today

A Qualified Income Trust (Miller Trust) is a valuable tool for individuals in Texas who need long-term care but have income that exceeds Medicaid eligibility limits. By establishing a Miller Trust, individuals can preserve their financial resources, qualify for Medicaid benefits, and ensure access to essential medical care. At Carroll Law Group, we assist Texas residents in creating and managing Miller Trusts, guiding them through the process of Medicaid planning and ensuring compliance with all legal requirements. Whether you are facing the challenges of long-term care or planning ahead for the future, a Miller Trust can help protect your assets and secure the care you need. Let us help you create a Qualified Income Trust that meets Medicaid’s requirements and ensures you can access long-term care coverage when you need it most.