Policy History for 4.5.6 NON-BURIAL TRUSTS

Release 06-04

 

4.5.6 NON-BURIAL TRUSTS

4.5.6.1 Trust Principal

4.5.6.2 Revocable Trusts

4.5.6.3 Irrevocable Trusts

4.5.6.4 Special Needs Trust

4.5.6.5 Pooled Trusts

 

A trust is any arrangement in which a person (the "grantor") transfers property to another person with the intention that the person (the "trustee") hold, manage, or administer the property for the benefit of the grantor or of someone designated by the grantor (the "beneficiary").

 

The term “trust” includes any legal instrument or device or arrangement, which, even though not called a trust under state law, has the same attributes as a trust.  That is, the grantor transfers property to the trustee and the grantor's intention is that the trustee hold, manage, or administer the property for the benefit of the grantor or of the beneficiary.

 

The grantor can be:

 

  1. The MA client.
     

  2.  His/her spouse.
     

  3. A person, including a court or an administrative body, with legal authority to act in place of or on behalf of the client or the client’s spouse.  This includes a power of attorney or a guardian.
     

  4. A person, including a court or an administrative body, acting at the direction or upon the request of the client or the client’s spouse.  This includes relatives, friends, volunteers or authorized representatives.

4.5.6.1 Trust Principal

The trust principal is the amount placed in trust by the grantor plus any trust earnings paid into the trust and left to accumulate.

 

4.5.6.2 Revocable Trusts

A revocable trust is a trust which can be revoked, canceled or modified by the grantor or by a court.  A trust which is called irrevocable, but which will terminate if some action is taken by the grantor, is considered a revocable trust.

The trust principal of a revocable trust is an available asset.

4.5.6.3 Irrevocable Trusts

An irrevocable trust is a trust that cannot, in any way, be revoked by the grantor.

The trust principal of an irrevocable trust is not an available asset.

 

Note:  If the grantor is an institutionalized person , or some-one acting on behalf of an institutionalized person, setting up an irrevocable trust may be a divestment (4.7.13.2) and (4.7.13.3).

4.5.6.4 Special Needs Trust

If the Special Needs Trust is an irrevocable trust, follow the policy outlined in 4.5.6.3.   Disregard special needs trusts whose sole beneficiary is under age 65 and totally and permanently disabled (under SSI program rules) if it meets these conditions:

 

  1. The trust must be established for the sole benefit of the disabled person by his/her parent, grandparent, legal guardian or a court, and
     

  2. Contain a provision that, upon the death of the beneficiary, the Wisconsin MA program will receive all amounts remaining in the trust not in excess of the total amount of MA paid on behalf of the beneficiary.

 

The exception continues after the person turns 65, provided s/he continues to be disabled.  However, a grantor cannot add to the trust after the beneficiary turns 65.  Anything added to the trust after the beneficiary turns 65 is a divestment.  Money added before the beneficiary turns 65 is not a divestment

4.5.6.5 Pooled Trusts

Disregard pooled trusts for disabled persons.  They must meet the following conditions:

 

  1. Are established and managed by a non-profit association.  The pooled trust can contain funds that hold accounts funded by third parties for the benefit of the disabled person's own assets or income.
     

  2. Have separate accounts, within each fund, which are maintained for each beneficiary or the trust, but for purposes of investment and management of funds, the trust pools these accounts.  There may be a separate fund with accounts that include or benefit persons who do not have a disability.
     

  3. Contain accounts with the funds of disabled individuals (based upon SSI and Medicaid rules) that are established solely for their benefit by a parent, grandparent, or legal guardian of such individuals, by such individuals, or by a court.  If the account includes a residential dwelling, the individual must reside in that dwelling, but a spouse, caregiver or housemate can also live there with the MA applicant/recipient.
     

  4. Repay MA to the extent that amounts remaining upon death are not retained by the trust.

     

 

 

 

This page last updated in Release Number : 05-03

Release Date: 08-29-05

Effective Date: 08-29-05