Delaware Miller Trust / Qualified Income Trust (QIT)

DELAWARE IRREVOCABLE INCOME TRUST AGREEMENT

(Miller Trust / Qualified Income Trust under 42 U.S.C. § 1396p(d)(4)(B))

TRUST IDENTIFICATION

ARTICLE I — ESTABLISHMENT OF TRUST

1.01 Name of Trust

This trust shall be known as The [____________________________] Irrevocable Qualified Income Trust (the "Trust"). The Trustee shall establish a dedicated bank account titled in the name of the Trust at a federally insured financial institution doing business in the State of Delaware.

1.02 Settlor

The Settlor of this Trust is [____________________________] ("Settlor"), an applicant for or recipient of Delaware Long Term Care Medicaid administered by the Delaware Department of Health and Social Services ("DHSS"), Division of Medicaid and Medical Assistance ("DMMA").

1.03 Purpose

This Trust is established under and intended to qualify as a "Qualified Income Trust" pursuant to 42 U.S.C. § 1396p(d)(4)(B) and 16 Del. Admin. Code § 20000-20400 (DSSM § 20400), for the sole purpose of enabling Settlor to qualify for and continue to receive long-term care Medical Assistance benefits (nursing facility coverage and/or Home and Community-Based Services) administered by DHSS/DMMA. The Trust holds only income belonging to Settlor and is not intended to hold or shelter any resources or assets.

1.04 Irrevocability

This Trust is IRREVOCABLE. It cannot in any way be revoked, amended, modified, altered, or terminated by Settlor or any other person, except as expressly permitted by 42 U.S.C. § 1396p(d)(4)(B) or by order of the Delaware Court of Chancery or other court of competent jurisdiction. Consistent with DSSM § 20400, a trust that may be terminated by the grantor or by a court (or by any action of the grantor) is treated as revocable for Medicaid purposes and would defeat the purpose of this Trust.

1.05 Situs and Governing Law

The situs of this Trust is the State of Delaware. This Trust shall be governed by Delaware law, including the Delaware Trust Act (12 Del. C. Ch. 35), except to the extent preempted or modified by federal Medicaid law and DSSM § 20400. The Delaware Court of Chancery shall have exclusive jurisdiction over any dispute concerning the construction or administration of this Trust under 10 Del. C. § 341 et seq.

ARTICLE II — FUNDING AND CONTRIBUTIONS

2.01 Trust Corpus

The Trust shall be funded solely with income received by or on behalf of Settlor, including but not limited to:

☐ Social Security retirement, survivors, or disability benefits
☐ Railroad retirement annuities
☐ Private pensions or employer retirement payments
☐ Veterans benefits (excluding Aid & Attendance and Unusual Medical Expenses)
☐ Annuity payments
☐ Workers' compensation periodic payments
☐ Other periodic income: [____________________________]

2.02 No Resources or Assets

No pre-existing resources, savings, investments, real property, lump-sum distributions, gifts, inheritances, or other non-income assets shall be deposited into this Trust. Any erroneous deposit of a non-income asset is void and shall be returned to the source. Deposit of resources into this Trust would breach the conditions of 42 U.S.C. § 1396p(d)(4)(B) and DSSM § 20400.

2.03 Full Redirection of Income Source

For each income source listed on Schedule A, the entire monthly payment from that source shall be directed into the Trust bank account. Per Delaware Medicaid policy, partial redirection of a single income source is not permitted; an entire income stream from a single payor must be either fully placed in the Trust or fully retained outside the Trust.

2.04 Timing of Deposits

Each item of income shall be deposited into the Trust account in the calendar month in which it is received. The Trustee shall maintain documentation evidencing timely deposit.

ARTICLE III — TRUSTEE

3.01 Initial Trustee

[____________________________] is appointed as Initial Trustee.

3.02 Successor Trustee

[____________________________] is appointed as Successor Trustee and shall serve upon the death, resignation, incapacity, or removal of the Initial Trustee.

3.03 Bond

No bond or other security shall be required of any Trustee unless ordered by the Delaware Court of Chancery or required by DHSS/DMMA.

3.04 Trustee Powers and Duties

The Trustee shall:

• (a) Establish and maintain a dedicated bank account in the name of the Trust, separate from any personal account of Settlor or Trustee.
• (b) Ensure timely deposit of all income identified on Schedule A.
• (c) Make distributions only as authorized in Article IV.
• (d) Maintain complete, accurate, and contemporaneous records of all deposits and disbursements and produce them upon request of DHSS/DMMA, the Division of Social Services, or a court.
• (e) Provide annual accountings to Settlor (or Settlor's authorized representative) and, upon request, to DHSS/DMMA.
• (f) Notify DHSS/DMMA of any change in income, Trustee, or banking institution within ten (10) days.
• (g) Comply with all duties imposed under the Delaware Trust Act (12 Del. C. Ch. 35).

ARTICLE IV — DISTRIBUTIONS DURING SETTLOR'S LIFETIME

The Trustee shall, each calendar month, distribute the Trust corpus only in the following order and only as permitted by federal Medicaid law and DSSM:

4.01 Personal Needs Allowance

First, the personal needs allowance ("PNA") established by Delaware for the Settlor's living arrangement (nursing facility, HCBS, or other).

4.02 Community Spouse Allowance

Second, if Settlor has a community spouse, the Minimum Monthly Maintenance Needs Allowance ("MMMNA") and any excess shelter allowance authorized under 42 U.S.C. § 1396r-5 and DSSM.

4.03 Family Allowance

Third, any family member allowance authorized by DHSS/DMMA.

4.04 Health Insurance Premiums

Fourth, Medicare premiums (Parts B and D), Medicare Supplement premiums, and any other health insurance premiums covering Settlor.

4.05 Non-Covered Medical Expenses

Fifth, medical expenses incurred by Settlor that are not subject to payment by Medicare, Medicaid, or any third party.

4.06 Patient Pay / Share of Cost

Sixth, the Settlor's required "patient pay" amount to the nursing facility or HCBS provider as calculated by DHSS/DMMA.

4.07 Trust Administration Expenses

Seventh, reasonable trust administration expenses (bank fees, accounting), to the extent permitted by DHSS/DMMA.

4.08 Prohibited Distributions

No distribution shall be made:

• For the benefit of any person other than Settlor (except community spouse/family allowances authorized above);
• For health insurance premiums of other family members;
• For any purpose unrelated to Settlor's care and allowable expenses.

ARTICLE V — REMAINDER / STATE PAYBACK

5.01 State of Delaware as Remainder Beneficiary

Upon the death of Settlor, all funds remaining in the Trust shall be paid to the State of Delaware, Department of Health and Social Services (DHSS) – Estate Recovery Unit, up to the total amount of Medical Assistance benefits paid by Delaware (and any other state) on Settlor's behalf during Settlor's lifetime, in compliance with 42 U.S.C. § 1396p(d)(4)(B)(iii), 42 U.S.C. § 1396p(b), and DSSM § 20995 (Estate Recovery).

5.02 Multiple-State Reimbursement

If Settlor received Medicaid benefits from more than one state, the remaining Trust funds shall be distributed among the participating states pro rata based on each state's proportionate share of total benefits paid, as required by DSSM § 20400.

5.03 Notice to DHSS Estate Recovery

Within thirty (30) days of Settlor's death, the Trustee shall notify the DHSS Estate Recovery Unit in writing, provide a final accounting, and tender any payback due. Notice shall be sent to:

Delaware Department of Health and Social Services
Division of Medicaid and Medical Assistance – Estate Recovery Unit
[Current address available from DHSS]

5.04 Residual Beneficiaries

Only after DHSS (and any other state Medicaid agency) is reimbursed in full may any residual funds be distributed to [____________________________] (residual beneficiary, if any).

ARTICLE VI — TAX AND ACCOUNTING

6.01 Grantor Trust

This Trust is intended to be a "grantor trust" under Internal Revenue Code §§ 671–679, with all items of income, deduction, and credit taxable to Settlor.

6.02 Taxpayer Identification Number

The Trustee may use Settlor's Social Security number as the Trust's taxpayer identification number to the extent permitted by the Internal Revenue Service.

6.03 No Delaware Income Tax Shelter

This Trust is established solely for Medicaid eligibility purposes under 42 U.S.C. § 1396p(d)(4)(B) and DSSM § 20400 and is not intended as a Delaware income-tax-planning vehicle.

ARTICLE VII — MISCELLANEOUS

7.01 Conformity with Federal and State Medicaid Law

This Trust shall at all times be construed to conform with 42 U.S.C. § 1396p(d)(4)(B), DSSM § 20400, and any successor or amended provisions. Any provision of this Trust that conflicts with such law is void to the extent of the conflict, and the remainder of the Trust shall continue in full force.

7.02 Spendthrift

To the maximum extent permitted by 12 Del. C. § 3536 and other Delaware law, the interest of Settlor and any other beneficiary in this Trust shall not be voluntarily or involuntarily assigned, alienated, or pledged.

7.03 Court of Chancery

Any judicial proceeding concerning the construction, administration, or termination of this Trust shall be brought exclusively in the Delaware Court of Chancery under 10 Del. C. § 341 et seq. and 12 Del. C. Ch. 35.

7.04 Severability

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

7.05 No Authority to Modify Payback

Notwithstanding any other provision of this Trust, no Trustee, Settlor, beneficiary, or court shall have authority to modify, waive, or impair the State of Delaware's right to reimbursement under Article V.

SIGNATURES

SETTLOR:

By: _________________________________ Date: [__/__/____]
[____________________________], Settlor

By: _________________________________ Date: [__/__/____]
[____________________________], [Spouse / Agent under POA / Guardian] on behalf of Settlor

INITIAL TRUSTEE:

By: _________________________________ Date: [__/__/____]
[____________________________], Initial Trustee, accepting appointment

Trustee Mailing Address: [____________________________]
Trustee Email (if any): [____________________________]

NOTARIZATION (Delaware)

STATE OF DELAWARE
COUNTY OF [☐ New Castle ☐ Kent ☐ Sussex]

On this [____] day of [____________], 20[____], before me, the undersigned Notary Public in and for the State of Delaware, personally appeared [____________________________] (Settlor) and [____________________________] (Initial Trustee), 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 Delaware that the foregoing is true and correct.

_________________________________
Notary Public, State of Delaware
My commission expires: [__/__/____]

Notary Seal:

SCHEDULE A — INCOME SOURCES TO BE DEPOSITED

Total Monthly Income to Trust: $[____________]

APPOINTMENT OF SUCCESSOR TRUSTEE

I, [____________________________], Settlor, hereby appoint [____________________________] as Successor Trustee, to serve upon the death, resignation, incapacity, or removal of the Initial Trustee.

Settlor signature: _________________________________ Date: [__/__/____]

Acknowledgment by Successor Trustee:

_________________________________ Date: [__/__/____]
[____________________________], Successor Trustee

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — Qualified Income Trust (Miller Trust) federal authority
• 42 U.S.C. § 1396p(b) — Medicaid estate recovery
• 42 U.S.C. § 1396r-5 — Spousal impoverishment / MMMNA
• 16 Del. C. Ch. 5 — Delaware Medicaid program
• 16 Del. Admin. Code § 20000-20400 (DSSM § 20400) — Trusts (Delaware Division of Social Services Manual)
• DSSM § 20200 — Income; § 20300 — Resources; § 20995 — Estate Recovery
• 12 Del. C. Ch. 35 — Delaware Trust Act
• 12 Del. C. Ch. 49A — Delaware Durable Personal Powers of Attorney Act
• 10 Del. C. § 341 et seq. — Court of Chancery jurisdiction over trusts
• Delaware Department of Health and Social Services (DHSS), Division of Medicaid and Medical Assistance (DMMA) — administering agency
• DHSS Estate Recovery Unit — remainder beneficiary