Medicaid Policy                                                                 

512-2.2 Irrevocable Trusts Established on or after August 11, 1993

Effective Date: April 1, 2008

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When the individual or the individual's spouse (or guardian) has established a trust on or after August 11, 1993 and they cannot amend or terminate the trust without the consent of all the beneficiaries and approval of a court, the trust is irrevocable.  Being irrevocable does not make the trust an unavailable resource. In most cases, the trust is still a countable resource to the individual and spouse.

 

1. Payments can be made from the trust.  

If there are any circumstances under which payments can be made to, or for the benefit of the individual or spouse from all or part of the trust, the following rules apply to that portion of the trust.

 

1. The portion of the principal of the trust that could be paid to, or for the benefit of the individual or spouse is a countable resource.

2. Income received by the trust that could be paid to, or for the benefit of the individual or spouse is a countable resource.

3. Payments made directly to the individual or spouse, or to someone who helps manage their finances such as a guardian, conservator, representative payee, or other responsible person is income in the month the payment is received.

4. Payments to a third party for items or services that benefit the individual or spouse count as income if that type of payment would be counted under the applicable income policy, for example payments for food and shelter count as income for aged, blind or disabled individuals.

5. Payments made to others that are not for the benefit of the individual or spouse are treated as a transfer of assets for less than fair market value.  See section 575-1 if payments made from the trust do not benefit the individual or the individual’s spouse, or if any changes are made to the trust that restrict or limit its use for the individual or spouse.

 

2. Payments cannot be made from the trust.  

 

If no payments can be made to or for the benefit of the individual or spouse, from either all of the trust, or from some portion of the trust, treat the trust, or that unavailable portion as a transfer of assets for less than fair market value.  See 575-1.  The value of the trust, or the value of the unavailable portion of the trust, is excluded from resources.