California Miller Trust / Qualified Income Trust (Medi-Cal)

QUALIFIED INCOME TRUST (MILLER TRUST)

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

APPLICABILITY IN CALIFORNIA — READ FIRST

California is a "medically needy" / share-of-cost state, not an income-cap state. A Qualified Income Trust (QIT / "Miller Trust") is generally NOT used and NOT required to establish Medi-Cal eligibility in California.

• California's Medicaid program is Medi-Cal, administered by the California Department of Health Care Services (DHCS) and processed at the county level.
• California has no special income limit / 300% SSI "income cap" that bars long-term-care eligibility. Instead, an applicant whose income exceeds the Medically Needy Income Level (MNIL) — historically $600/month for an individual and $934/month for a couple (Cal. Welf. & Inst. Code § 14005.7) — qualifies through a Share of Cost (SOC) spend-down: the applicant contributes the excess income toward the cost of care/medical expenses each month, and Medi-Cal pays the remainder.
• Because there is no income cliff, an applicant is never "too rich" for Medi-Cal long-term care on income grounds; excess income becomes a share of cost rather than a disqualification. This is the legal mechanism a California applicant uses instead of a QIT.
• A nursing-facility resident retains a Personal Needs Allowance (historically $35/month under DHCS policy) and may divert income to a community spouse under federal spousal-impoverishment rules.

When this QIT instrument MAY apply in California. The trust below is a complete and federally valid instrument under 42 U.S.C. § 1396p(d)(4)(B), which authorizes states to disregard trusted income when a state has adopted the "special income standard" of 42 C.F.R. § 435.236 (up to 300% of the SSI Federal Benefit Rate — $2,982/month for 2026, i.e., 300% × $994 FBR). As of this review, DHCS has not been confirmed to have adopted the special income standard for any Medi-Cal program. California's confirmed § 1915(c) HCBS waivers (e.g., the Home and Community-Based Alternatives (HCBA) Waiver, the Developmental Disabilities (HCBS-DD) Waiver, and the Multipurpose Senior Services Program (MSSP) Waiver) instead use institutional deeming into the same medically needy / Share-of-Cost framework described above — they waive parental/spousal income deeming but do not impose a 300%-FBR special income cap and do not require a QIT. Accordingly, this instrument should be treated as inapplicable under current, confirmed DHCS policy and retained only as a contingency in case DHCS adopts the special income standard for a future program. Do not execute or fund this trust for general Medi-Cal eligibility, and do not execute it for any specific program without first obtaining written confirmation from DHCS / county counsel and a California elder law attorney that the special income standard — rather than medically needy Share-of-Cost or institutional deeming — actually governs that program. Where it does not (the norm in California), use the Medi-Cal Share-of-Cost spend-down instead.

TRUST IDENTIFICATION

ARTICLE I — RECITALS AND PURPOSE

1.1 Settlor. [SETTLOR FULL LEGAL NAME], an individual residing at [SETTLOR ADDRESS], in [____________] County, California ("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 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 satisfy the income requirements of a California Medi-Cal program that imposes the federal special income standard (42 C.F.R. § 435.236; up to 300% of the SSI Federal Benefit Rate) by directing Settlor's monthly income (or such portion as is necessary) into an irrevocable trust so that the income deposited is not counted in determining eligibility under that special income limit.

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) and applicable DHCS/Medi-Cal policy.

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) Cal. Welf. & Inst. Code § 14005.7 and § 14006 et seq.; (c) 22 Cal. Code Regs. § 50601 et seq.; and (d) applicable DHCS All County Welfare Director Letters and the Medi-Cal Eligibility Procedures Manual. Any provision 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) a California-chartered bank or trust company, (b) a competent adult family member or other adult, or (c) a licensed professional fiduciary (Cal. Bus. & Prof. Code § 6500 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 Medi-Cal 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 Medi-Cal 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/Medi-Cal 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 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 applicable special income limit (300% of the SSI Federal Benefit Rate, $2,982/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 California State Plan to:

California Department of Health Care Services (DHCS)
Third Party Liability and Recovery Division — Estate Recovery Section
M.S. 4720, P.O. Box 997425
Sacramento, California 95899-7425

4.2 Notice of Death. Within sixty (60) days after Settlor's death (and in any event within the period required by Cal. Welf. & Inst. Code § 14009.5), the Trustee shall provide written notice to the DHCS Estate Recovery Section, with a certified copy of the death certificate, and shall request a statement of the amount of medical assistance paid by Medi-Cal on behalf of Settlor.

4.3 Secondary Remainder Beneficiaries. If, and only if, DHCS receives full reimbursement of all medical assistance paid on behalf of Settlor (and subject to any applicable estate-recovery exemptions), any remaining trust corpus shall be distributed as follows:

4.4 Mandatory State Payback Controls. The DHCS payback right under this Article supersedes any conflicting direction of Settlor and is binding on all secondary beneficiaries. This clause is required by 42 U.S.C. § 1396p(d)(4)(B) and may not be waived.

ARTICLE V — PERMITTED DISTRIBUTIONS DURING SETTLOR'S LIFETIME

5.1 Order of Monthly Distributions. Each month, the Trustee shall make distributions ONLY in the following order and ONLY to the extent permitted by current Medi-Cal policy:

(a) Personal Needs Allowance to Settlor in the amount established by DHCS ($[____] per month; historically $35.00);
(b) Health Insurance Premiums including Medicare Part B, Part D, and supplemental (Medigap) premiums paid on behalf of Settlor;
(c) Community Spouse Monthly Income Allowance to Settlor's community spouse, if any, under federal spousal-impoverishment rules (the Minimum Monthly Maintenance Needs Allowance);
(d) Family Allowance to dependent family members as authorized by Medi-Cal;
(e) Guardian / Conservator Fees approved by the Superior Court of California, 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, or HCBS provider in the amount determined by Medi-Cal.

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 expense inconsistent with Medi-Cal policy or that would jeopardize Settlor's eligibility;
(d) Lend trust funds to any person;
(e) Accumulate trust income beyond what is necessary for 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 DHCS 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 Medi-Cal. Trustee shall provide a fully executed copy of this Trust, with the dedicated trust account information, to the county Medi-Cal eligibility worker processing Settlor's 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 the relevant Medi-Cal program for any reason other than excess income, after all payback obligations to DHCS 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 DHCS 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 California, including the California Trust Law (Cal. Prob. Code § 15000 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 (California Notarization — Cal. Civ. Code § 1189)

A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA
COUNTY OF [____________]

On [__/__/____], before me, [NOTARY NAME], 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 California 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

☐ FIRST confirm with DHCS / county / California elder law attorney whether a QIT is actually permitted or required — California uses the Medi-Cal Share-of-Cost spend-down and, for HCBS waivers, institutional deeming; NO confirmed CA program currently uses a QIT
☐ Verify the applicable income standard (MNIL vs. the 42 C.F.R. § 435.236 special income limit) for the specific program, and obtain written DHCS/county confirmation before relying on the special income standard
☐ If applying for an HCBS waiver, confirm whether institutional deeming (not a special income standard) governs — this is the norm for California's HCBS-DD, HCBA, and MSSP waivers
☐ Confirm the reinstated Medi-Cal asset limit ($130,000 individual / $195,000 couple, effective January 1, 2026) and 30-month transfer look-back do not affect eligibility separately from income
☐ Confirm Settlor is otherwise eligible for Medi-Cal (level of care, applicable asset limit, citizenship, CA residency)
☐ Open dedicated trust bank account with $0 initial balance (only if a QIT is required)
☐ Re-direct income deposits to QIT account in month of receipt
☐ Provide signed Trust and account information to the county Medi-Cal eligibility worker
☐ Confirm Trustee is not the Settlor
☐ DHCS named as primary remainder beneficiary up to total medical assistance paid
☐ Notarize before a California Notary Public
☐ Provide certified copy to community spouse, if applicable
☐ Calendar annual income-standard update

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — federal Qualified Income Trust authority
• 42 C.F.R. § 435.236 — federal special income standard (300% SSI FBR institutional cap); not confirmed adopted by any California Medi-Cal program
• 42 C.F.R. § 435.217 — HCBS waiver "institutional deeming," the mechanism California's HCBS waivers (HCBS-DD, HCBA, MSSP) actually use in lieu of a special income standard
• Cal. Welf. & Inst. Code § 14005.7 — Medi-Cal medically needy / share of cost (MNIL: $600/mo individual, $934/mo couple)
• Cal. Welf. & Inst. Code § 14009.5 — Medi-Cal estate recovery
• 22 Cal. Code Regs. § 50601 et seq. — Medi-Cal eligibility regulations
• Cal. Prob. Code § 15000 et seq. — California Trust Law (Division 9)
• DHCS Estate Recovery Program: https://www.dhcs.ca.gov/services/estate-recovery-program/
• DHCS Asset Limit FAQ (reinstated $130,000/$195,000 asset limit effective 1/1/2026): https://www.dhcs.ca.gov/medi-cal/help/asset-limit-frequently-asked-questions/
• DHCS Medi-Cal Eligibility Procedures Manual and All County Welfare Director Letters (ACWDLs)
• CANHR, "Understanding the Share of Cost for Medi-Cal": https://canhr.org/understanding-the-share-of-cost-for-medi-cal/
• Justice in Aging, "Reinstatement of the Medi-Cal Asset Limit FAQ": https://justiceinaging.org/reinstatement-of-medi-cal-asset-limit-faq/

Template last updated: 2026-06-14; last verified 2026-07-06. California is a medically needy / share-of-cost state, and its confirmed HCBS waivers use institutional deeming — NOT a special income standard. A QIT is NOT confirmed necessary for any current California Medi-Cal program; this instrument is provided as a contingency only. Confirm current MNIL, Personal Needs Allowance, 300% FBR figure, and reinstated asset limit ($130,000/$195,000, eff. 1/1/2026) with DHCS before relying on this document.