New Mexico Miller Trust / Qualified Income Trust (QIT)

NEW MEXICO MILLER TRUST / QUALIFIED INCOME TRUST (QIT)

(Irrevocable Income Diversion Trust under 42 U.S.C. § 1396p(d)(4)(B) and NMAC 8.281.510.11)

TRUST CAPTION

ARTICLE I. ESTABLISHMENT AND PURPOSE

1.1 Establishment.

This Qualified Income Trust (the "Trust") is created by [SETTLOR FULL LEGAL NAME] ("Settlor"), of [COUNTY] County, New Mexico, on [__/__/____], and is established for the sole and exclusive purpose of enabling the Settlor to obtain or maintain eligibility for medical assistance benefits under the New Mexico Medicaid program administered by the New Mexico Health Care Authority ("HCA") through diversion of income that would otherwise cause the Settlor's gross monthly income to exceed the applicable Medicaid income cap (the "Special Income Level," equal to three hundred percent (300%) of the Federal SSI Benefit Rate).

1.2 Statutory Authority.

This Trust is intended to qualify in all respects as a "Qualified Income Trust" within the meaning of section 1917(d)(4)(B) of the Social Security Act, 42 U.S.C. § 1396p(d)(4)(B), and as a "recognized medicaid trust" / "income diversion trust" within the meaning of NMAC 8.281.510.11. All provisions of this Trust shall be construed and administered consistent with such authorities, NMAC 8.281.500 (Medicaid eligibility - resources), the New Mexico Uniform Trust Code at NMSA 1978 § 46A, and NMSA 1978 § 27-2-12 et seq.

1.3 Purpose Statement.

The sole purpose of this Trust is to receive income of the Settlor, hold such income only as is necessary to permit the Settlor to qualify for Medicaid under New Mexico's income-cap rules, and disburse such income each month in accordance with applicable federal and New Mexico Medicaid policy. The Trust is not intended, and shall not be construed, to shelter assets, defeat estate recovery, or accomplish any purpose inconsistent with 42 U.S.C. § 1396p(d)(4)(B) or NMAC 8.281.510.11.

1.4 Irrevocability.

This Trust is IRREVOCABLE. The Settlor expressly waives and surrenders any power to revoke, amend, alter, modify, or terminate this Trust, in whole or in part, except as required to conform to changes in 42 U.S.C. § 1396p(d)(4)(B), NMAC 8.281, or New Mexico Medicaid policy that are essential to maintain the Trust's qualified status.

ARTICLE II. FUNDING AND TRUST CORPUS

2.1 Permitted Funding - Income Only.

The corpus of this Trust shall consist EXCLUSIVELY of income of the Settlor, including but not limited to:

☐ Social Security retirement, survivors, or disability benefits (Title II)
☐ Supplemental Security Income (SSI) - only to the extent permitted by HCA policy
☐ Pension or retirement plan distributions (private, public, governmental, military)
☐ Annuity payments
☐ Veterans' benefits
☐ Workers' compensation periodic payments
☐ Required Minimum Distributions (RMDs) from IRAs or qualified plans
☐ Other unearned income: [________________________________]

2.2 Prohibited Funding.

The following shall NEVER be deposited into this Trust:

(a) Resources of any kind, including cash savings, certificates of deposit, stocks, bonds, mutual funds, real property, or proceeds from the sale of resources;

(b) Income or resources of any person other than the Settlor;

(c) Lump-sum settlements, inheritances, or one-time payments not constituting "income" within the meaning of 20 C.F.R. § 416.1102; and

(d) Gifts or contributions from third parties.

2.3 Funding Mechanics.

Each month, the Settlor (or the Settlor's authorized representative or trustee) shall cause sufficient income to be deposited into the Trust account so that the Settlor's gross monthly income remaining outside the Trust does not exceed the applicable New Mexico Medicaid income cap. The Trustee shall maintain a dedicated, segregated bank account titled in the name of the Trust and bearing the Trust's separate taxpayer identification number.

ARTICLE III. DISTRIBUTIONS DURING SETTLOR'S LIFETIME

3.1 Mandatory Monthly Distribution Hierarchy.

The Trustee shall, no less frequently than monthly, distribute the entire balance of the Trust account (less any reasonable bank fees and a de minimis reserve as permitted by HCA) in the following order of priority, consistent with New Mexico Medicaid post-eligibility treatment of income rules:

First: Personal Needs Allowance (PNA) for the Settlor, in the amount established by New Mexico HCA.

Second: Court-ordered or HCA-approved Community Spouse Monthly Income Allowance, if applicable, under 42 U.S.C. § 1396r-5 and NMAC 8.281.

Third: Family Maintenance Allowance for dependent family members, if any, as approved by HCA.

Fourth: Health insurance premiums, including Medicare Part B and Part D, Medigap, and other private health insurance premiums of the Settlor.

Fifth: Necessary medical or remedial care expenses of the Settlor that are not subject to payment by Medicaid or any third party.

Sixth: The remainder, as the "patient liability" / "share of cost," to the nursing facility, ICF/IID, or HCBS waiver provider in payment of the Settlor's cost of care.

3.2 No Discretion to Accumulate.

The Trustee shall have NO discretion to accumulate income in the Trust beyond the month of receipt except such minimal amount as may be necessary to maintain the Trust bank account in good standing.

3.3 No Distributions to Settlor in Cash.

Except for the Personal Needs Allowance, no Trust funds shall be distributed directly to the Settlor in cash or cash equivalents that could be deemed a countable resource in the following month.

ARTICLE IV. TRUSTEE

4.1 Trustee Eligibility.

The Settlor may NOT serve as Trustee and shall have no power, authority, or ability to manage, direct, or control the Trust account, consistent with NMAC 8.281.510.11(A)(6).

4.2 Appointment of Trustee.

The Settlor appoints [TRUSTEE FULL LEGAL NAME] as Trustee. If [TRUSTEE FULL LEGAL NAME] is unable or unwilling to serve, [SUCCESSOR TRUSTEE FULL LEGAL NAME] shall serve as Successor Trustee.

4.3 Trustee Duties.

The Trustee shall:

(a) Open and maintain a segregated, dedicated Trust bank account;
(b) Obtain a separate Employer Identification Number (EIN) for the Trust from the IRS;
(c) Deposit income into the Trust each month as required by Article II;
(d) Disburse Trust funds each month in the priority order set forth in Article III;
(e) Maintain complete and accurate records of all deposits and disbursements;
(f) Provide the New Mexico HCA and any successor Medicaid agency with copies of all Trust records, bank statements, and accountings upon request, at no cost to HCA;
(g) File any required federal and state income tax returns for the Trust;
(h) Notify HCA promptly of any material change in trusteeship, banking, or administration; and
(i) Administer the Trust in strict compliance with 42 U.S.C. § 1396p(d)(4)(B), NMAC 8.281.510.11, and the New Mexico Uniform Trust Code.

4.4 Trustee Compensation.

The Trustee ☐ shall serve without compensation ☐ shall be entitled to reasonable compensation as permitted by NMSA 1978 § 46A and approved by HCA, not to exceed [________________________________].

4.5 No Loans.

The Trustee shall not make any loan from the Trust to the Settlor, the Trustee, or any other person or entity. (NMAC 8.281.510.11(A)(12).)

ARTICLE V. REMAINDER BENEFICIARY AND ESTATE RECOVERY

5.1 Mandatory State Payback / Reversionary Provision.

Upon the death of the Settlor, the Trustee shall immediately pay to the State of New Mexico, through the New Mexico Health Care Authority's Estate Recovery Unit (or such other agency designated by New Mexico law), all amounts remaining in the Trust, up to the total amount of medical assistance paid on behalf of the Settlor by the New Mexico Medicaid program. This provision is mandatory under 42 U.S.C. § 1396p(d)(4)(B) and NMAC 8.281.510.11(A)(2).

5.2 Multi-State Allocation.

If the Settlor received Medicaid benefits in more than one state, the Trustee shall distribute remaining Trust funds to each such state in proportion to the total amount of Medicaid benefits paid by each state on the Settlor's behalf, consistent with NMAC 8.281.510.11(A)(2).

5.3 Residual Remainder.

If, and only if, the Trust contains funds remaining after the State of New Mexico (and any other state Medicaid agency entitled under Section 5.2) has been paid in full, such residual funds shall be distributed to: [RESIDUAL REMAINDER BENEFICIARY OR "the Settlor's probate estate"].

5.4 Notice of Death.

The Trustee shall provide written notice of the Settlor's death to the New Mexico HCA Estate Recovery Unit within thirty (30) days of the date of death and shall provide a final accounting.

ARTICLE VI. NEW MEXICO HCA REVIEW AND COMPLIANCE

6.1 HCA Right of Review.

The New Mexico HCA shall have the right to review this Trust and its administration at least annually and more frequently upon HCA's request, as provided in NMAC 8.281.510.11(A)(8). The Trustee shall cooperate fully.

6.2 Service of Process.

The HCA shall be named as an interested party in any legal action concerning this Trust and shall be served in accordance with the New Mexico Rules of Civil Procedure, as required by NMAC 8.281.510.11(A)(5).

6.3 Drafter Identification.

The person who drafted this Trust is identified in the Trust Caption above, as required by NMAC 8.281.510.11(A)(7).

6.4 Savings Clause.

If any provision of this Trust is determined to be inconsistent with the requirements of 42 U.S.C. § 1396p(d)(4)(B), NMAC 8.281.510.11, or any other applicable federal or New Mexico Medicaid authority, such provision shall be deemed modified to the minimum extent necessary to bring this Trust into compliance, and the remainder of the Trust shall continue in full force and effect.

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 New Mexico, including the New Mexico Uniform Trust Code at NMSA 1978 § 46A, and applicable federal Medicaid law.

7.2 Spendthrift Provision.

To the maximum extent permitted by law and consistent with the purposes of this Trust, the Settlor's interest in the Trust shall not be subject to voluntary or involuntary alienation, assignment, pledge, attachment, or claims of creditors of the Settlor other than the New Mexico HCA and any other state Medicaid agency entitled under Article V.

7.3 Severability.

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

7.4 Termination.

This Trust shall terminate upon the earliest of: (a) the death of the Settlor (subject to Article V); (b) exhaustion of the Trust corpus following payment to the State; or (c) a written determination by HCA that the Trust is no longer required for Settlor's Medicaid eligibility (subject to HCA's payback rights).

EXECUTION

Settlor

I, [SETTLOR FULL LEGAL NAME], having read and understood this Qualified Income Trust, and intending to be legally bound, execute it as my free act and deed this [____] day of [____________], 20[____].

Trustee Acceptance

I, [TRUSTEE FULL LEGAL NAME], accept appointment as Trustee of this Qualified Income Trust and agree to administer it in accordance with its terms, 42 U.S.C. § 1396p(d)(4)(B), NMAC 8.281.510.11, and the New Mexico Uniform Trust Code.

Successor Trustee Acceptance (optional at execution)

NOTARY ACKNOWLEDGMENT - SETTLOR

STATE OF NEW MEXICO )
) ss.
COUNTY OF [________________] )

This instrument was acknowledged before me on [__/__/____] by [SETTLOR FULL LEGAL NAME], as Settlor.

_______________________________________
Notary Public
My commission expires: [__/__/____]
[NOTARY SEAL]

NOTARY ACKNOWLEDGMENT - TRUSTEE

STATE OF NEW MEXICO )
) ss.
COUNTY OF [________________] )

This instrument was acknowledged before me on [__/__/____] by [TRUSTEE FULL LEGAL NAME], as Trustee.

_______________________________________
Notary Public
My commission expires: [__/__/____]
[NOTARY SEAL]

SCHEDULE A - INITIAL FUNDING (Income Sources)

Total Gross Monthly Income: $[__________]
Applicable NM Medicaid Income Cap (300% SSI FBR for execution year): $[__________]
Excess to be Diverted Monthly: $[__________]

SCHEDULE B - TRUSTEE ADMINISTRATIVE CHECKLIST

☐ Obtain separate EIN for Trust from IRS (Form SS-4)
☐ Open dedicated Trust bank account titled "[Trust Name], [Trustee Name], Trustee"
☐ Set up monthly deposit / direct deposit of excess income
☐ Establish disbursement order under Article III
☐ Submit fully executed Trust, Schedule A, and bank verification to NM HCA
☐ Maintain monthly accounting and retain bank statements
☐ Provide annual accounting to HCA on request (NMAC 8.281.510.11(A)(8))
☐ Notify HCA Estate Recovery Unit within 30 days of Settlor's death
☐ File IRS Form 1041 (and NM PIT-1) annually if required

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) (Qualified Income Trust / Miller Trust authority)
• 42 U.S.C. § 1396r-5 (Treatment of income and resources of married couples)
• NMAC 8.281.510.11 (Recognized Medicaid Trusts - New Mexico)
• NMAC 8.281.500 (Medicaid Eligibility - General Requirements)
• NMSA 1978 § 27-2-12 et seq. (New Mexico Medical Assistance)
• NMSA 1978 § 46A (New Mexico Uniform Trust Code)
• POMS SI 01120.203 (SSA Program Operations Manual - Trusts)
• New Mexico Health Care Authority (HCA), Medical Assistance Division - https://www.hca.nm.gov/