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Miller Trusts- Misconceptions

Miller Trusts- Misconceptions
Special Needs Trusts
Jason Neufeld
December 30, 2022

Today's question is, "What are some common misconceptions with regard to Miller trusts?" 

There's a Florida Medicaid planning topic that we'd have to discuss with a lot of our clients who are looking for help paying for long-term care. And there are a lot of misconceptions about what a Miller trust does when it is useful. When are they supposed to be used? 

I'm Jason Neufeld, and I'm the managing partner of Elder Needs Law. This is sure to be an interesting topic, so let's get started.

A Miller Trust Is Also Known As A Qualified Income Trust

Miller trusts are also known as "qualified income trusts" and are also known as "income-only trusts." So these are different terms that mean the same thing. Perhaps the most common misconception I get from potential clients or people doing research on this kind of Florida Medicaid planning is they think of qualified income trust or Miller trust as this panacea, this "cure-all," they say. "Let's just take all our money, we'll just put it all into a Miller Trust," "Let's just put it all into two into an Income Trust," and then we'll be qualified for Medicaid. 

That is a very dangerous approach to take and completely false. 

Medicaid Eligibility

To really understand where a Miller trust is going to make sense is to understand that there are really two different tests that you need to satisfy in order to be qualified for Florida Medicaid long-term care services, such as how paying for care on the home care in an assisted living facility or care in a nursing home or skilled nursing facility. 

One has an asset test, which says, essentially, with some limited circumstances, you can't have more than $2,000 to the Medicaid applicant's name and an income test. And if your income is above a certain amount in 2024, that is $2,829. If your income is more than $2,829.  

Miller Trust Misconceptions

If you're watching this video and 2025 or later, that number will have changed. Still, they're looking at your Social Security income, looking at pensions, looking at 401k distributions, looking at rental income. They're adding it all up together. And if it's more than the income cap for that year, you need to utilize a qualified income trust or a Miller trust. Again- the same thing. They are used interchangeably. 

So that's where the misconception is, right? If you had $100,000 to your name, you would not just stick it in a qualified income trust and call it a day because an Income Trust is just for income; it's not for assets, and it'd be dangerous to stick all of your assets into an income trust because there is a Medicaid payback obligation out of funds that are in an Income Trust. 

That's the second big misconception; people say, "Well, after I pass away, then my children or my heirs or a charity, whoever I want is going to get what's left in my Miller trust." And that is generally not the case. And Income Trust requires the trustee to notify Medicaid, and anything in that trust when the Medicaid recipient passes away goes back to Medicaid to the extent of Medicaid lien. 

Now, this isn't a big deal if you're using an Income Trust properly because income goes in, and then income comes out to pay for health, wellness, and medical-related needs that Medicaid is not already covering, right? So, for example, if your income was $2,929, use a simple example that's $100 over the 2024 income cap, meaning only $100 needs to go inside a qualified income trust room. So you'd put $100 in every month, January through December, every month you want to be eligible for Medicaid. 

And then what would happen is the money would come right back out, maybe even the next day, to pay for things that you need. So this is when people think of a trust, they often think of money accumulating, but that is not the case with a Miller trust. That's not the case with a qualified income trust. We want this account to almost zero out at the end of the month. And so right. 

So what if you happen to pass away before you've been able to spend your extra $100? In our hypothetical example, okay, you've lost $100. You could have paid $100 Back to the government when you passed away, no big deal. You've gotten so much more by way of benefits. But if you are stuck in $100,000, if you let that money accumulate, that could be a big problem. So a Miller trust is not a cure-all. A Miller trust is not the one-stop shop we use for all our Medicaid planning needs. It is one tool only for people who have too much by way of an income if people who have too much by way of assets. We have lots of other things to talk about. It won't be a Miller trust, though. So I hope this answers the question about some common misconceptions. Middle trusts are not to be used for assets, but a payback obligation exists. 

And Miller trusts are also used for health, wellness, and medical-related expenses. And so sometimes we're talking about a different type of trust or a different type of solution. When We have more than just medical things to pay for, like rent and mortgage payments and property taxes and stuff like that, but that's for a different video and maybe even a consultation. 

Experienced Elder Need Lawyer In Florida

So, again, my name is Jason Neufeld. I'm the managing partner of Elder Needs Law. We are a full-service Elder Law Firm focusing on Medicaid planning, estate planning, and probate throughout Florida, no matter where you or your loved one is. 

If someone needs legal assistance in the state of Florida, please give us a call. Phone numbers are on the screen. You see it right there. Visit our website and schedule a consultation. I hope you found this video informative. If you have, please share it and give it a thumbs up. Please subscribe to the channel. We're trying to get a lot of good information out to as many Floridians as possible. Have a great day.

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Jason Neufeld

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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