A trust is a legal arrangement in which a person or organization, like a bank, manages assets for someone else. There are several different kinds of trusts. Income and resources that are assigned or titled to a trust may be counted differently when determining if someone qualifies for AHCCCS.
This Chapter focuses on how trusts impact eligibility for the ALTCS program. For information on how trust income or income assigned to a trust affects other AHCCCS programs, see MA606MMM.
Trusts are created for many reasons. Trusts can be used to transfer ownership of resources to someone to avoid probate, reduce estate taxes or provide for a person’s future needs. There are also a group of trusts that can allow people who would not otherwise qualify due to excess resources or income to become eligible for ALTCS. These trusts must follow strict federal and state rules to qualify for this special treatment, which is why they are often called “Special Treatment Trusts” (STT).
How the trust’s income, resources and disbursements are treated when determining ALTCS eligibility depends on:
Whether the trust qualifies as a Special Treatment Trust;
Whose income or resources were used to fund the trust;
Who created the trust; and
Whether the trust is revocable or irrevocable.
The chart below describes how to identify the common types of trusts:
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If the Trust… |
Then the Trust Is Probably… |
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Created before August 11, 1993 with the income or resources of the customer, the spouse, or both |
Medicaid Qualifying Trust (MA802.3) |
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Revocable non-special treatment trust (MA802.1) |
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Irrevocable non-special treatment trust (MA802.2) |
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Is funded from the proceeds of a Will or with the income, resources or both of someone other than the customer or the customer’s spouse. NOTE May be referred to as a “special needs trust”. |
Testamentary or Non-Grantor (MA802.4) |
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Special Treatment Trust See MA803 for policy on the three types of STT. |
Trusts are reviewed for impact to eligibility, and sent for a legal review if needed.
NOTE All potential Special Treatment Trusts are sent for a legal review to see if the trust qualifies for special treatment.
See How to Review and Refer a Trust for processing instructions. If a customer refuses to provide any requested documents, refer the trust for review and add a note on the Policy Clarification Request (PCR) about the refusal.
Important!
Some financial accounts look like trusts and even include the word “trust” in the title, but are not actual trusts. Examples include patient trust accounts and accounts maintained by a representative payee or conservator. For these accounts see MA704.
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Term |
Definition |
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Beneficiary |
A person or entity entitled to receive the principal, income or both from a trust. |
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Disbursement |
A payment or distribution from the trust corpus or trust earnings. |
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Irrevocable |
Means the grantor or the grantor’s representative may not end the trust after it is made. NOTE A trust that states it is irrevocable but will end by some action taken by the grantor is a revocable trust. |
|
Non-grantor trust |
A trust funded with the assets of someone other than the beneficiary. For example, a grandparent creates a trust funded with her own money for the benefit of her grandchild. Sometimes called Special Needs Trusts. |
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Revocable |
Means the person who set up the trust has the right to end it. A revocable trust can be ended by:
A trust that says it can be changed or ended by a court is considered a revocable trust. |
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Trust Corpus |
The income and resources that fund the trust. The resources or income in the trust corpus may be available to the customer, but are no longer owned by the customer. NOTE The trust corpus may also be called the trust principal. |
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Trustee |
A person or organization that manages the trust resources and income for the benefit of the beneficiaries. |
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Trust document |
The formal document that created the trust. It contains the powers of the trustees and rights of the beneficiaries. It may be a will, a deed in trust or a formal declaration of trust. |
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Trustor |
One who creates a trust. Also called a settlor or grantor. |
Proof needed to identify trusts and assets titled to the trust includes:
The complete trust instrument or document setting up the trust. This includes all amendments, restatements and schedules to date;
Court records relating to the trust;
Court approved injury settlement;
Will;
Proof of income or resources assigned to the trust like a quit claim deed, vehicle title or bank statements showing accounts titled to the trust.
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Program |
Legal Authorities |
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ALTCS |
42 USC § 1396p(d) ARS 36-2934.01 AAC R9-28-407 AAC R9-28-408 |