Alabama Miller Trust / Qualified Income Trust (QIT)

ALABAMA MILLER TRUST / QUALIFIED INCOME TRUST AGREEMENT

CAPTION

Trust Name: The [SETTLOR LAST NAME] Qualified Income Trust

Date of Execution: [__/__/____]

County of Settlor's Residence: [________________________________] County, Alabama

ARTICLE I — ESTABLISHMENT AND PURPOSE

1.1 Establishment

I, [SETTLOR FULL LEGAL NAME] (the "Settlor"), of [________________________________], [________________] County, Alabama, hereby establish this irrevocable trust to be known as THE [SETTLOR LAST NAME] QUALIFIED INCOME TRUST (the "Trust"), and I appoint [TRUSTEE FULL LEGAL NAME] of [________________________________] as Trustee.

1.2 Statement of Purpose

The sole purpose of this Trust is to establish a Qualified Income Trust ("Miller Trust") within the meaning of 42 U.S.C. § 1396p(d)(4)(B) so that the Settlor may qualify for Long-Term Care Medicaid benefits administered by the Alabama Medicaid Agency under Ala. Admin. Code Chapter 560-X-25, including:

• ☐ Institutional Nursing Facility Medicaid
• ☐ Home and Community-Based Services (HCBS) Elderly & Disabled Waiver
• ☐ Other HCBS Waiver: [________________________________]
• ☐ Programs of All-Inclusive Care for the Elderly (PACE)

1.3 Irrevocability

This Trust is IRREVOCABLE. The Settlor expressly waives any power to alter, amend, revoke, or terminate this Trust, except as may be required to conform this instrument to the requirements of 42 U.S.C. § 1396p(d)(4)(B), 42 U.S.C. § 1396a(a)(10)(A)(ii)(V), or any controlling rule or written directive of the Alabama Medicaid Agency.

1.4 Income-Cap Findings

The Settlor's gross monthly income from all sources exceeds the special-income-level cap (300% of the SSI Federal Benefit Rate) used by the Alabama Medicaid Agency under Ala. Admin. Code r. 560-X-25-.10, but is less than the private-pay cost of the nursing facility or community-based services for which the Settlor is applying. This Trust is therefore necessary to establish income eligibility.

ARTICLE II — TRUST FUNDING

2.1 Permitted Trust Property

The Trust shall consist solely of the following categories of the Settlor's regularly recurring income:

• ☐ Social Security retirement, disability, or survivor benefits
• ☐ Federal, state, military, or private pension or retirement benefits
• ☐ Required Minimum Distributions from IRA or qualified plan (if received as monthly income)
• ☐ Veterans Administration benefits (subject to VA assignment rules)
• ☐ Railroad Retirement benefits
• ☐ Annuity payments classified as income
• ☐ Other regularly recurring income: [________________________________]

2.2 Property That Shall NOT Be Deposited

The following shall NEVER be deposited into the Trust, and any such deposit is void ab initio:

• Lump-sum payments, retroactive benefits, inheritances, gifts, or settlement proceeds
• Resources or assets of any kind (bank accounts, CDs, real property proceeds)
• Income belonging to the Settlor's spouse or any third party
• Federal tax refunds (excluded from eligibility income and resources for 12 months under 26 U.S.C. § 6409 for federally funded benefit programs; keep outside this income-only Trust). Review other refunds under the applicable program rules.

2.3 Trust Bank Account

The Trustee shall open and maintain a separate, segregated bank account titled in the name of the Trust at an FDIC-insured Alabama financial institution. All Trust funds shall be held in that account. The Trustee shall not commingle Trust funds with the Trustee's personal funds or with any other person's funds.

2.4 Funding Mechanics

The Trustee shall arrange for direct deposit of the designated income source(s) into the Trust account. The Settlor authorizes the Trustee to execute any direct-deposit authorization, EFT instruction, or financial institution form necessary to effectuate funding.

ARTICLE III — DISTRIBUTIONS

3.1 Mandatory Monthly Distributions

The Trustee shall, in each calendar month and in the following order of priority, distribute Trust income consistent with Ala. Admin. Code r. 560-X-25-.10 and the applicable post-eligibility treatment-of-income rule: 42 C.F.R. § 435.725 for institutional care or § 435.726 for waiver home and community-based services:

1. Personal Needs Allowance to or for the benefit of the Settlor in the amount permitted by the Alabama Medicaid Agency (currently $30/month for nursing-facility residents; verify current amount): $[__________]/month.

2. Community Spouse Monthly Income Allowance (if applicable) under Ala. Admin. Code r. 560-X-25-.16 and 42 U.S.C. § 1396r-5(d): $[__________]/month to [COMMUNITY SPOUSE NAME].

3. Family Allowance for dependent family members residing with the community spouse: $[__________]/month.

4. Health Insurance Premiums including Medicare Part B, Part D, and any Medicare Supplement (Medigap) premiums.

5. Incurred Medical Expenses not subject to third-party payment.

6. Guardian or Conservator Fees approved by the probate court (subject to Alabama Medicaid limits).

7. Patient Liability / Cost-of-Care Contribution to the nursing facility or HCBS provider, as calculated by the Alabama Medicaid Agency.

3.2 No Discretionary Distributions

The Trustee shall have no discretion to accumulate income, retain income beyond the month of receipt, or distribute Trust income for any purpose other than those expressly authorized in Section 3.1 and consistent with 42 U.S.C. § 1396p(d)(4)(B).

3.3 Trustee Compensation

The Trustee shall serve ☐ without compensation OR ☐ for reasonable compensation not to exceed $[________]/month, payable from the Trust, only to the extent permitted by Alabama Medicaid Agency policy.

ARTICLE IV — STATE REIMBURSEMENT FROM TRUST REMAINDER

4.1 State of Alabama as Residual Beneficiary

Upon the death of the Settlor, all funds remaining in the Trust (the "Residual Trust Property") shall be paid to the STATE OF ALABAMA, ALABAMA MEDICAID AGENCY, up to the total amount of medical assistance paid on behalf of the Settlor by the Alabama Medicaid Agency, in accordance with 42 U.S.C. § 1396p(d)(4)(B)(ii). This trust-remainder payment is separate from estate recovery under 42 U.S.C. § 1396p(b).

4.2 Recovery Payment Address

The Trustee shall, within thirty (30) days of the Settlor's death, notify and remit Residual Trust Property to:

Alabama Medicaid Agency
Estate Recovery Unit
501 Dexter Avenue
Montgomery, AL 36103-5624

4.3 Excess Residue

If, after full satisfaction of the State of Alabama's claim, any Trust property remains, the remainder shall pass to:

[________________________________] (contingent beneficiary), OR if none survive, to the Settlor's estate under intestate succession per Ala. Code § 43-8-40 et seq.

4.4 Estate Recovery Is Separate

The surviving-spouse and child restrictions in 42 U.S.C. § 1396p(b)(2) limit recovery under that subsection from an individual's estate. They do not defer the State's remainder interest in this qualifying income trust under § 1396p(d)(4)(B)(ii). The Trustee shall resolve the State's trust-remainder claim under Section 4.1 before distributing any excess residue.

ARTICLE V — TRUSTEE PROVISIONS

5.1 Trustee Independence

The Trustee shall act independently and shall owe a fiduciary duty solely to the lawful purposes of this Trust. The Trustee shall not be the nursing facility, HCBS provider, or any agent thereof providing services to the Settlor.

5.2 Successor Trustee

If the named Trustee is unable or unwilling to serve, the following shall serve as Successor Trustee in the order listed:

1. [________________________________] of [________________________________]
2. [________________________________] of [________________________________]
3. A corporate trustee or Alabama-chartered bank's trust department designated by court order

The Trustee or Successor Trustee shall promptly file a Successor Trustee Appointment with the Alabama Medicaid Agency.

5.3 Trustee Powers

The Trustee shall have only those powers necessary to receive income, maintain the Trust account, make the mandatory monthly distributions enumerated in Article III, and account to the Alabama Medicaid Agency. The Trustee shall not have the power to invest, lend, encumber, or commingle Trust assets.

5.4 Accounting

The Trustee shall maintain complete records of all deposits and disbursements and shall provide an accounting to the Alabama Medicaid Agency upon request and at each annual Medicaid redetermination.

5.5 Bond

☐ The Trustee shall serve without bond.
☐ The Trustee shall post bond in the amount of $[__________].

ARTICLE VI — ABLE ACCOUNT COORDINATION

Alabama permits the use of ABLE Act accounts under 26 U.S.C. § 529A and Ala. Code § 16-33C-1 et seq. (Alabama ABLE Act) for qualifying individuals with disabilities. An ABLE account is NOT a substitute for a Qualified Income Trust and does not satisfy the income-cap rule of Ala. Admin. Code r. 560-X-25-.10. An ABLE account may be used in addition to a Miller Trust to shelter retained assets or personal-needs-allowance accumulations, subject to ABLE program rules.

ARTICLE VII — GENERAL PROVISIONS

7.1 Governing Law

This Trust shall be governed by, and construed in accordance with, the laws of the State of Alabama, including the Alabama Uniform Trust Code, Ala. Code § 19-3B-101 et seq., and the federal Medicaid statutes and regulations cited herein. To the extent of any conflict, federal Medicaid law shall control.

7.2 Severability

If any provision of this Trust is held invalid, the remainder shall remain in effect, and the invalid provision shall be reformed to the minimum extent necessary to comply with 42 U.S.C. § 1396p(d)(4)(B).

7.3 Spendthrift Clause

To the maximum extent permitted by Ala. Code § 19-3B-502, the interests of the Settlor and all beneficiaries are subject to a spendthrift restriction and are not assignable or subject to claims of creditors, except as required to satisfy the State of Alabama's residual beneficiary claim under Article IV.

7.4 Reformation Authority

The Trustee is authorized to petition any Alabama court of competent jurisdiction, or the Alabama Medicaid Agency, to reform this Trust to maintain compliance with 42 U.S.C. § 1396p(d)(4)(B) and Alabama Medicaid policy.

SIGNATURES

Settlor

Executed this [____] day of [__________________], 20[____], in [________________] County, Alabama.

____________________________________
[SETTLOR FULL LEGAL NAME], Settlor

Trustee Acceptance

I, [TRUSTEE FULL LEGAL NAME], accept the appointment as Trustee of THE [SETTLOR LAST NAME] QUALIFIED INCOME TRUST and acknowledge the fiduciary duties imposed by 42 U.S.C. § 1396p(d)(4)(B), Ala. Admin. Code Chapter 560-X-25, and the Alabama Uniform Trust Code.

____________________________________
[TRUSTEE FULL LEGAL NAME], Trustee

Date: [__/__/____]

NOTARIAL ACKNOWLEDGMENT

STATE OF ALABAMA

COUNTY OF [________________________________]

On this [____] day of [__________________], 20[____], before me, the undersigned Notary Public, personally appeared [SETTLOR FULL LEGAL NAME] and [TRUSTEE FULL LEGAL NAME], known to me (or satisfactorily proven) to be the persons whose names are subscribed to the foregoing instrument, and they acknowledged to me that they executed the same for the purposes therein contained, as their free and voluntary act.

In witness whereof I hereunto set my hand and official seal.

____________________________________
Notary Public

My Commission Expires: [__/__/____]

[NOTARY SEAL]

EXHIBIT A — SCHEDULE OF INCOME SOURCES

Income-Cap Verification (2026 SSI 300% FBR = $2,982; adjusts annually — verify current-year figure with the Alabama Medicaid Agency or SSA before filing): ☐ Income exceeds cap; QIT required.

EXHIBIT B — FILING AND APPROVAL CHECKLIST

☐ Trust drafted and executed before Alabama Medicaid application (or before retroactive month for which eligibility is sought)
☐ Separate Trust bank account opened at Alabama financial institution
☐ Direct deposit of income source(s) established
☐ Copy of executed Trust delivered to Alabama Medicaid Agency District Office
☐ Trustee accepted appointment in writing
☐ Notarial acknowledgment completed
☐ Successor Trustee designation on file
☐ State of Alabama designated as residual beneficiary
☐ Monthly distribution schedule documented (Personal Needs Allowance, premiums, patient liability)
☐ Annual accounting prepared for Medicaid redetermination

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — Qualified Income Trust safe harbor
• 42 U.S.C. § 1396a(a)(10)(A)(ii)(V) — 300% SSI special income level
• 42 U.S.C. § 1396p(b) — Estate recovery and exceptions
• 42 C.F.R. §§ 435.725, 435.726 — Post-eligibility treatment of income for institutional care and waiver home and community-based services, respectively
• Ala. Admin. Code Chapter 560-X-25 — Alabama Medicaid Eligibility, incl. r. 560-X-25-.10 (Income Criteria for Individuals in Institutions and HCBS Waivers, 300% SSI FBR) (https://admincode.legislature.state.al.us/api/chapter/560-X-25)
• Ala. Admin. Code r. 560-X-33-.05 — Alabama Medicaid Estate Recovery Program (https://admincode.legislature.state.al.us/administrative-code/560-X-33-.05)
• Ala. Code § 19-3B-101 et seq. — Alabama Uniform Trust Code
• Alabama Medicaid Long-Term Care Manual (https://medicaid.alabama.gov)
• Alabama Medicaid 2026 Income Limits (https://medicaid.alabama.gov/documents/3.0_Apply/3.2_Qualifying_Medicaid/3.2_Medicaid_Income_Limits_2026_3-11-26.pdf) — 2026 institutional/HCBS cap $2,982/mo (300% of $994 SSI FBR); figure changes annually