“Irrevocable Income Trusts”, “Qualified Income Trusts”, “Miller Trusts”, “d4B Trusts” – all of
these terms can be used interchangably. They refer to a type of special needs
trust that can be created to circumvent Florida Medicaid’s income limitation
rule (also referred to as the Medicaid Income Test). As of January 2019, a Florida
medicaid applicant can earn no more than $2,313 per month (gross, i.e. prior to
deducting for health insurance, Medicare or any other expenses) from all
sources (e.g. social security, pensions, 401(k), IRAs, investment income, etc…).
If someone wants to qualify for medicaid, and they earn more than $2,313 per
month, Florida has a fairly easy workaround: the qualified income trust.
Details on how these work can be found by clicking on the links below. [Note: Medicaid Income Cap was increased to $2,313.00 as of January, 2019 and will change from time-to-time]
So you would then go to an elder law attorney or medicaid
attorney to discuss drafting a qualified income trust. Your medicaid planning
lawyer would then gather some basic information and produce a qualified income trust document.
Mine runs about 15 pages. Other elder law attorney’s may have Miller Trust
documents that run a bit longer or shorter. While you know the goal the income
trust accomplishes, you may be wondering why the Miller Trust document has to
be so long? Or what is all the legal mumbo-jumbo actually saying?
The purpose of this article is to break down the Miller Trust
for you in plain english. Again, other elder law attorney miller trusts will
have variations, but the general concepts will likely be virtually identical.
Qualified Income Trust in Plain English
Typically the trust starts with “whereas” clauses. This just
states the intent of the trust. In this case it is only for the purpose of
holding income (no assets). Next, you will likely find key names and
The title of the trust is important because this is what the
bank will look at when opening an account in the name of the Miller Trust.
Trust Key Players
It will also note the Settlor (sometimes referred to as the
Grantor) of the Trust. The settlor / grantor just means the peron who is creating
the trust. If you are looking to qualify for Medicaid, you will likely be the “settlor” (although DCF also authorizes the medicaid applicant's spouse to establish the qualified income trust as well).
The Miller Trust will list the primary beneficiary – i.e. the
Medicaid applicant. This will likely be identical to the settlor / grantor, but
need not be. For example, if the beneficiary has a guardian, the guardian might
be the settlor who is establishing the trust for the benefit of the person
seeking Medicaid eligibility (who will be the named beneficiary).
Also on the first page, you will likely find the name(s) of
the initial Trustees or co-trustees (if more than one). The trustees are the
person or people (you can have more than one trustee) in charge of the trust.
The trustee cannot also be the beneficiary.
Another key party is the Florida Department of Children and
Families as they must be listed as primary beneficiary upon the death of the
The Income Trust Must Be Irrevocable
Another essential component of a qualified income trust is
that it be irrevocable. The qualified income trust can only be used for a very
limited purpose in order to be valid in the eyes of Medicaid / Department of
Children and Families. The Miller Trust document limits the trustee on what
they can and cannot deposit into the trust and what they can and cannot
withdraw from the Miller Trust.
If the Medicaid applicant is not receiving Medicaid benefits
or stops receiving Medicaid benefits, then the trustee is given broader
discretion on how to utilize the funds in the account.
The Qualified Income Trust Explains What Happens After The Medicaid
Recipient Passes Away
The Qualified Income Trust trustee has to abide by some very
strict rules on what is to be done with the money in the qualified income trust
account after the Medicaid recipient passes away.
First and foremost, the Florida Department of Children and
Families (the agency that administers Medicaid in Florida) and any other State
in which the Medicaid recipient received Medicaid benefits, must be notified.
DCF (and other states) will then submit their claims for reimbursement up to
the amount of benefits they paid. Only after DCF has been paid back in full can
the remaining amounts of money in the Miller Trust be distributed to other
beneficiaries (typically family members).
In the abundance of caution, the Miller Trust will name these
secondary beneficiaries. But realistically, there is a very small likelihood of
anyone but the State receiving anything. The reason for this is that the
Qualified Income Trust tends not to accumulate any money. Other than a small
personal-needs allowance ($105.00 as of the writing of this article) and very
few enumerated other expenses (e.g. health insurance premiums), the Medicaid
recipient’s income is mostly coming into the account and immediately flowing
out of the account to the skilled nursing home as part of the patient’s
What Happens if Miller Trust Trustee Cannot Serve or Resigns?
The trust sets forth the procedure to remove a trustee if
their capacity is called into question and also anticipates what would happen
if the trustee can otherwise no longer serve. There may be a named successor
trustee – sort of a trustee on deck that has no power now but would be willing
and able to step into the shoes of the initial trustee. The trust can also
provide a procedure for the settlor to name a new trustee should the initial
trustee and successor trustee(s) be unavailable to serve.
There are certainly other provisions but the above are the
major points covered. For further clarification, speak to your elder law
attorney or, if you do not have one, feel free to call us (305.931.0478) and set
up a consultation with Jason Neufeld by telephone or in person.