Arkansas Miller Trust / Qualified Income Trust

ARKANSAS MILLER TRUST / QUALIFIED INCOME TRUST

(Irrevocable Income-Only Trust under 42 U.S.C. § 1396p(d)(4)(B) for Arkansas Medicaid Long-Term Services and Supports)

TRUST IDENTIFICATION

ARTICLE I — RECITALS AND PURPOSE

1.1 Settlor. [SETTLOR FULL LEGAL NAME], an individual residing at [SETTLOR ADDRESS], in [____________] County, Arkansas ("Settlor"), is the Settlor and primary lifetime beneficiary of this Trust.

1.2 Statutory Authority. This Trust is established pursuant to 42 U.S.C. § 1396p(d)(4)(B), which authorizes the creation of a "Qualified Income Trust" composed only of pension, Social Security, and other income of the individual, the corpus of which is paid to the State upon the individual's death up to the amount of medical assistance paid on the individual's behalf.

1.3 Purpose. The sole purpose of this Trust is to enable Settlor to qualify for Arkansas Medicaid Long Term Services and Supports ("LTSS") — including nursing facility services, ARChoices, Living Choices Assisted Living, PACE, and other waiver programs — administered by the Arkansas Department of Human Services ("DHS"), Division of Medical Services, by diverting Settlor's gross monthly income into an irrevocable trust so that the deposited income is not counted in determining Settlor's eligibility under the Arkansas income cap.

1.4 Irrevocability. This Trust is, and shall remain at all times, IRREVOCABLE. Settlor expressly waives and disclaims any power to alter, amend, revoke, or terminate this Trust, except to the minimum extent required to maintain compliance with 42 U.S.C. § 1396p(d)(4)(B), Arkansas DHS Medical Services Policy Manual Section 5430, and other applicable Medicaid law.

1.5 Compliance with Federal and State Law. This Trust shall be construed and administered to comply at all times with: (a) 42 U.S.C. § 1396p(d)(4)(B); (b) Ark. Code Ann. § 20-77-101 et seq.; (c) Ark. Code Ann. § 20-77-303 and the Arkansas Medicaid Estate Recovery Program; (d) Arkansas DHS Medical Services Policy Manual Section 5430 (Income Trusts); and (e) the Arkansas Trust Code (Ark. Code Ann. § 28-73-101 et seq.). Any provision of this Trust that conflicts with those authorities shall be deemed amended to the minimum extent necessary to achieve compliance.

ARTICLE II — TRUSTEE

2.1 Initial Trustee. [TRUSTEE FULL LEGAL NAME], whose address is [TRUSTEE ADDRESS], is appointed Initial Trustee. The Trustee may be (a) an Arkansas-chartered bank or trust company, (b) an adult family member or other competent adult, or (c) a professional fiduciary.

2.2 Successor Trustee. If the Initial Trustee resigns, dies, becomes incapacitated, or is otherwise unable or unwilling to serve, [SUCCESSOR TRUSTEE FULL LEGAL NAME], of [SUCCESSOR TRUSTEE ADDRESS], shall serve as Successor Trustee.

2.3 Settlor Shall Not Serve as Trustee. Consistent with DHS policy and to avoid challenges to the Settlor's lack of control over trust assets, Settlor shall not serve as Trustee of this Trust.

2.4 Trustee Bond. ☐ A bond is waived. ☐ Trustee shall post bond in the amount of $[__________].

2.5 Trustee Compensation. Trustee shall serve ☐ without compensation or ☐ for reasonable compensation not to exceed $[______] per month, provided such compensation qualifies as a permissible distribution under DHS Medical Services Policy Manual Section 5430 and ARTICLE V.

ARTICLE III — FUNDING OF TRUST

3.1 Initial Corpus. This Trust shall be funded with a zero ($0.00) balance and shall be deemed established upon (a) execution of this instrument and (b) opening of a dedicated trust bank account at an Arkansas financial institution titled exactly as follows:

"[TRUSTEE NAME], Trustee of the [SETTLOR NAME] Qualified Income Trust dated [__/__/____]"

3.2 Permitted Trust Property. The Trust shall receive ONLY the following categories of Settlor's income:

☐ Social Security retirement, disability, or survivor benefits
☐ Veterans Administration benefits
☐ Pension and retirement annuity payments
☐ Railroad Retirement benefits
☐ Civil Service Retirement payments
☐ Required Minimum Distributions from IRAs / 401(k)s / 403(b)s
☐ Other income of Settlor: [_____________________________]

3.3 Prohibited Property. The Trust SHALL NOT receive:

(a) Any income, asset, or resource belonging to any person other than Settlor;
(b) Any of Settlor's countable resources, savings, or non-income assets;
(c) Gifts, inheritances, lump-sum settlements, or other one-time payments not characterized as income under SSI/Medicaid rules;
(d) Any property that would convert the Trust into a "self-settled asset trust" outside the scope of 42 U.S.C. § 1396p(d)(4)(B).

3.4 Timing of Deposits. Income directed into the Trust shall be deposited in the calendar month in which it is normally received by Settlor. Income not deposited timely may be counted by DHS as available income and may jeopardize eligibility.

3.5 Income Diversion. ☐ All of Settlor's income shall be deposited into the Trust each month. ☐ Only the portion of Settlor's monthly income that exceeds the Arkansas Medicaid LTSS income cap (currently 300% of the SSI Federal Benefit Rate) shall be deposited.

ARTICLE IV — REMAINDER BENEFICIARY (STATE PAYBACK)

4.1 Primary Remainder Beneficiary. Upon the death of Settlor, the Trustee shall pay from the remaining trust property all amounts up to the total amount of medical assistance paid on behalf of Settlor under the Arkansas State Plan to:

Arkansas Department of Human Services
Division of County Operations — Estate Recovery Unit
P.O. Box 1437, Slot S401
Little Rock, Arkansas 72203-1437

4.2 Notice of Death. Within thirty (30) days after Settlor's death, the Trustee shall provide written notice to the DHS Estate Recovery Unit, together with a certified copy of the death certificate, and shall request a statement of the amount of medical assistance paid by DHS on behalf of Settlor pursuant to Ark. Code Ann. § 20-77-307 (Estate Recovery).

4.3 Secondary Remainder Beneficiaries. If, and only if, DHS receives full reimbursement of all medical assistance paid on behalf of Settlor, any remaining trust corpus shall be distributed as follows:

4.4 Compliance with Arkansas Estate Recovery. The DHS payback right under this Article supersedes any conflicting direction of Settlor and is binding on all secondary beneficiaries. The Trustee shall not distribute any trust property to secondary beneficiaries until DHS provides a written release confirming full satisfaction or waiver of estate recovery claims.

ARTICLE V — PERMITTED DISTRIBUTIONS DURING SETTLOR'S LIFETIME

5.1 Order of Monthly Distributions. Each month, the Trustee shall make distributions from the Trust ONLY in the following order and ONLY to the extent permitted by current DHS Medical Services Policy Manual Section 5430:

(a) Personal Needs Allowance to Settlor in the amount established by Arkansas DHS for nursing facility or waiver recipients (currently $[______] per month);
(b) Health Insurance Premiums including Medicare Part B, Part D, and any supplemental insurance premiums paid on behalf of Settlor;
(c) Community Spouse Monthly Maintenance Needs Allowance (CSMMNA) to Settlor's community spouse, if any, under federal spousal-impoverishment rules and Arkansas DHS policy;
(d) Family Allowance to dependent family members as authorized by DHS;
(e) Guardian / Conservator Fees approved by an Arkansas Circuit Court (Probate Division), if applicable;
(f) Trustee Fee authorized under Section 2.5;
(g) Bank Fees for the trust account;
(h) Patient Liability / Vendor Payment payable to the nursing facility, assisted living facility, ARChoices waiver provider, or other LTSS provider in the amount determined by DHS.

5.2 Prohibited Distributions. The Trustee SHALL NOT:

(a) Distribute trust property to or for the benefit of any person other than Settlor or as authorized in Section 5.1;
(b) Make gifts of trust property;
(c) Pay any expenses inconsistent with DHS policy or that would jeopardize Settlor's Medicaid eligibility;
(d) Lend trust funds to any person;
(e) Accumulate trust income beyond what is necessary for the ordinary administration of the Trust.

5.3 Zero Balance Goal. Trustee shall manage distributions so that the trust account is, to the extent practicable, reduced to or near zero at the end of each calendar month.

ARTICLE VI — ADMINISTRATIVE PROVISIONS

6.1 Accountings. Trustee shall maintain detailed monthly records of all deposits and disbursements and shall provide an accounting to DHS upon request and to Settlor (or Settlor's guardian/conservator/agent) at least annually.

6.2 Tax Matters. This Trust is a grantor trust for federal income tax purposes under 26 U.S.C. §§ 671–679. All trust income shall be reported on Settlor's individual income tax return (Form 1040). Trustee shall obtain a separate Employer Identification Number only if required by the financial institution holding the trust account.

6.3 Notice to DHS. Trustee shall provide a fully executed copy of this Trust, together with the dedicated trust account information, to the DHS caseworker at the local Arkansas DHS County Office processing Settlor's Medicaid LTSS application.

6.4 Termination. This Trust shall terminate upon (a) the death of Settlor and full distribution of remaining trust property under Article IV, or (b) Settlor's ineligibility for Arkansas Medicaid LTSS for any reason other than excess income, after all payback obligations to DHS have been satisfied.

6.5 Spendthrift Provision. No interest of any beneficiary shall be subject to voluntary or involuntary transfer, assignment, attachment, garnishment, or claim of creditors, except as required by 42 U.S.C. § 1396p(d)(4)(B) and Arkansas DHS estate-recovery rights.

6.6 Severability. If any provision of this Trust is held invalid, the remaining provisions shall continue in full force and effect.

6.7 Governing Law. This Trust shall be governed by and construed under the laws of the State of Arkansas, including the Arkansas Trust Code (Ark. Code Ann. § 28-73-101 et seq.), to the extent not preempted by federal Medicaid law.

ARTICLE VII — EXECUTION

IN WITNESS WHEREOF, the undersigned Settlor and Trustee have executed this Qualified Income Trust on the date first written above.

ACKNOWLEDGMENT (Arkansas Notarization — Ark. Code Ann. § 21-14-101 et seq.)

STATE OF ARKANSAS
COUNTY OF [____________]

On this [____] day of [__________], 20[____], before me, the undersigned Notary Public in and for the State of Arkansas, 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 acknowledged that they executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

_________________________________
Notary Public — State of Arkansas
My Commission Expires: [__/__/____]
Commission Number: [____________]

(SEAL)

EXHIBIT A — TRUST FUNDING WORKSHEET

DRAFTING / FILING CHECKLIST

☐ Verify current Arkansas income cap with DHS (300% of SSI FBR; adjusted each January)
☐ Confirm Settlor is otherwise eligible for Arkansas Medicaid LTSS (medical necessity / nursing facility level of care, $2,000 asset cap, citizenship, Arkansas residency)
☐ Open dedicated trust bank account with $0 initial balance at an Arkansas financial institution
☐ Re-direct income deposits to QIT account in month of receipt
☐ Provide signed Trust and account information to DHS caseworker at local Arkansas DHS County Office
☐ Confirm Trustee is not the Settlor
☐ DHS named as primary remainder beneficiary up to total Medicaid assistance paid
☐ Notarize before an Arkansas Notary Public
☐ Provide certified copy to community spouse, if applicable
☐ Calendar annual income-cap update each January
☐ Reference DHS PUB-396 Income Trust Fact Sheet for current Arkansas DHS guidance

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — federal Qualified Income Trust authority
• Ark. Code Ann. § 20-77-101 et seq. — Arkansas Medicaid Program
• Ark. Code Ann. § 20-77-303 — DHS Medicaid administration
• Ark. Code Ann. § 20-77-307 — Arkansas Medicaid Estate Recovery
• Arkansas DHS Medical Services Policy Manual, Section 5430 (Income Trusts / Miller Trusts)
• Arkansas Administrative Code 016.28 — Division of Medical Services rules
• Arkansas DHS Publication PUB-396, "Income Trust Fact Sheet": https://humanservices.arkansas.gov/wp-content/uploads/PUB-396_Income_Trust_Fact_Sheet.pdf
• Arkansas Trust Code, Ark. Code Ann. § 28-73-101 et seq.
• AR Law Help, "Medicaid: Miller Trusts": https://a.arlawhelp.org/medicaid/miller-trusts

Template last updated: 2026-05-16. Verify current income cap, FBR, and DHS Medical Services Policy Manual Section 5430 before execution.