Miller Trusts – Spousal Protected Resource Allowance

Dear Mr. Premack: Can an individual file for a Miller Trust prior to entering a nursing home or do they have to wait until they have actually entered the nursing home? – DO

A Miller Trust is a legal tool necessary to help qualify for Medicaid benefits when the applicant’s income exceeds the allowable monthly limit. As of April, 2010 the income limit is $2,022 per month.

Miller Trusts have an interesting legal history. The idea was first recognized in a federal lawsuit in Colorado, brought in part by a family named Miller. The Medicaid applicant had monthly income that exceeded the limit, and the family had gone to  a local court where they obtained a judge’s order that part of that income be segregated into a trust. Miller then applied for Medicaid but was denied, and sued in federal court.

The federal court ruled in favor of Miller. It held that the income diverted to the trust could not be included when Medicaid calculated the applicant’s monthly income. This put Miller below the income cut-off and allowed Medicaid to provide assistance.

Congress followed up by changing federal law to expressly allow Miller Trusts, although this legal tool is often referred to as a “Qualified Income Trust (QIT)” since the law was updated. Using a QIT allows someone who has few resources but higher monthly income to qualify for Medicaid. It does not act as an asset shelter, and the income that passes through it is still spent on the patient’s care or on the at-home spouse’s allowance.

You ask when a QIT should be started. Officially, the QIT must be submitted to the Medicaid caseworker along with the application for benefits. An application can only be submitted after the patient has spent 29 days in the nursing facility. Thus, the QIT should be prepared in the weeks leading up to the application date (which may be shortly before admission to the nursing home, but is usually during that 29-day waiting period).

You should contact a qualified Elder Law attorney for assistance in preparing the QIT. It must meet various statutory and regulatory standards before Medicaid will accept it. Anyone in Texas can get more information about Qualified Income Trusts on my website at http://www.Premack.com.

Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.

Original Publication: San Antonio Express News, April 16, 2010

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Paul Premack, 2019-2020 President of the Texas Chapter of the National Academy of Elder Law Attorneys (NAELA) is *Certified as an Elder Law Attorney ( CELA ) by the National Elder Law Foundation as accredited by the Texas Board of Legal Specialization and the ABA. He is licensed to practice law in Texas and in Washington State, and handles San Antonio Probate and Bexar County Probate, Wills, Living Trusts, Estate Planning, and writes the legal column for the San Antonio Express News.

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