Arizona Miller Trust / Qualified Income Trust (ALTCS)

ARIZONA MILLER TRUST / QUALIFIED INCOME TRUST

(Irrevocable Income-Only Trust under 42 U.S.C. § 1396p(d)(4)(B) for ALTCS Eligibility)

TRUST IDENTIFICATION

ARTICLE I — RECITALS AND PURPOSE

1.1 Settlor. [SETTLOR FULL LEGAL NAME], an individual residing at [SETTLOR ADDRESS], in [____________] County, Arizona ("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 permit Settlor to qualify for benefits under the Arizona Long Term Care System ("ALTCS") administered by the Arizona Health Care Cost Containment System ("AHCCCS") by directing Settlor's monthly gross income (or such portion as is necessary) into an irrevocable trust so that the income deposited shall not be counted in determining Settlor's eligibility for ALTCS under the 300% SSI 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 extent expressly required to maintain compliance with 42 U.S.C. § 1396p(d)(4)(B), A.A.C. R9-28, and the AHCCCS Medical Policy Manual.

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) A.R.S. § 36-2931 et seq.; (c) A.A.C. Title 9, Chapter 28; (d) the AHCCCS Medical Policy Manual; and (e) the ALTCS Eligibility Policy Manual. 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 Arizona-chartered bank or trust company, (b) an adult family member or other competent adult, or (c) a professional fiduciary licensed under A.R.S. § 14-5651 et seq.

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 AHCCCS 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 is a permitted distribution under AHCCCS policy 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 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 not classified as income, or other one-time payments unless those payments are 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 AHCCCS 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 ALTCS income cap (currently 300% of the SSI Federal Benefit Rate, $2,982 per month for 2026, as adjusted annually) 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 Arizona State Plan to:

Arizona Health Care Cost Containment System (AHCCCS)
Office of Administrative Legal Services — Estate Recovery / Third Party Liability Unit
801 East Jefferson Street, MD 6200
Phoenix, Arizona 85034

4.2 Notice of Death. Within thirty (30) days after Settlor's death, the Trustee shall provide written notice to AHCCCS Estate Recovery, with a certified copy of the death certificate, and shall request a statement of the amount of medical assistance paid by AHCCCS on behalf of Settlor.

4.3 Secondary Remainder Beneficiaries. If, and only if, AHCCCS 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 A.R.S. § 36-2935 and Federal Estate Recovery. The AHCCCS payback right under this Article supersedes any conflicting direction of Settlor and is binding on all secondary beneficiaries.

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 AHCCCS policy:

(a) Personal Needs Allowance to Settlor in the amount established by AHCCCS ($[______] per month, currently $30.00 institutional FBR);
(b) Health Insurance Premiums including Medicare Part B, Part D, and any supplemental insurance premiums paid on behalf of Settlor;
(c) Community Spouse Monthly Income Allowance (CSMIA) to Settlor's community spouse, if any, calculated under A.A.C. R9-28-409 and federal spousal-impoverishment rules;
(d) Family Allowance to dependent family members as authorized by AHCCCS;
(e) Guardian / Conservator Fees approved by the Superior Court of Arizona, if applicable;
(f) Trustee Fee authorized under Section 2.5;
(g) Bank Fees for the trust account;
(h) Share of Cost / Patient Liability payable to the nursing facility, assisted living facility, or HCBS provider in the amount determined by AHCCCS.

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 that are not consistent with AHCCCS policy or that would jeopardize Settlor's ALTCS 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 AHCCCS 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.

6.3 Notice to AHCCCS. Trustee shall provide a fully executed copy of this Trust, together with the dedicated trust account information, to the ALTCS caseworker at the Department of Economic Security (DES) Family Assistance Administration office processing Settlor's application (typically the Maricopa County or Pima County FAA office, or other regional ALTCS office).

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 ALTCS for any reason other than excess income, after all payback obligations to AHCCCS 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 AHCCCS 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 Arizona, including the Arizona Trust Code (A.R.S. § 14-10101 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 (Arizona Notarization — A.R.S. § 41-264)

STATE OF ARIZONA
COUNTY OF [____________]

On this [____] day of [__________], 20[____], before me, the undersigned Notary Public, personally appeared [SETTLOR FULL LEGAL NAME] and [TRUSTEE FULL LEGAL NAME], who proved to me on the basis of satisfactory evidence to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of Arizona that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________
Notary Public
My Commission Expires: [__/__/____]
Commission Number: [____________]

(SEAL)

EXHIBIT A — TRUST FUNDING WORKSHEET

DRAFTING / FILING CHECKLIST

☐ Verify current ALTCS income cap with AHCCCS (300% of SSI FBR; $2,982/month in 2026)
☐ Confirm Settlor is otherwise eligible for ALTCS (medical PAS, $2,000 asset cap, citizenship, AZ residency)
☐ Open dedicated trust bank account with $0 initial balance
☐ Re-direct income deposits to QIT account in month of receipt
☐ Provide signed Trust and account information to ALTCS caseworker (DES FAA)
☐ Confirm Trustee is not the Settlor
☐ AHCCCS named as primary remainder beneficiary up to total medical assistance paid
☐ Notarize before an Arizona Notary Public
☐ Provide certified copy to community spouse, if applicable
☐ Calendar annual income-cap update each January

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — federal Qualified Income Trust authority
• A.R.S. § 36-2931 et seq. — Arizona Long Term Care System
• A.A.C. Title 9, Chapter 28 — AHCCCS Long Term Care Program rules
• AHCCCS, "ALTCS Policies on Special Treatment Trusts" (DE-819)
• AHCCCS Medical Policy Manual (AMPM), Chapter 800
• ALTCS Eligibility Policy Manual (EPM), Chapter 600 (Income Eligibility)
• AHCCCS Estate Recovery / Third Party Liability Unit: https://www.azahcccs.gov

Template last updated: 2026-05-16. Verify current income cap, FBR, and AHCCCS policy before execution.