South Carolina Miller Trust / Qualified Income Trust (Medicaid Income Trust)

SOUTH CAROLINA MEDICAID INCOME TRUST

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

TRUST INSTRUMENT CAPTION

ARTICLE I. ESTABLISHMENT AND PURPOSE OF TRUST

1.1 Establishment. I, [GRANTOR FULL LEGAL NAME] ("Grantor," "Settlor," or "Beneficiary"), residing at [_______________________________________________], South Carolina, hereby establish this irrevocable trust this [____] day of [_______________], 20[____], for the sole purpose of qualifying for Medicaid benefits administered by the South Carolina Department of Health and Human Services ("SCDHHS"), under Title XIX of the Social Security Act and the South Carolina State Medicaid Plan.

1.2 Statutory Basis. This Trust is intended to qualify as a "Qualified Income Trust" within the meaning of:

• ☐ 42 U.S.C. § 1396p(d)(4)(B);
• ☐ SCDHHS Medicaid Policy and Procedures Manual (MPPM), Chapter 304 (Nursing Home / HCBS / GH; Income Cap and Income Trust);
• ☐ S.C. Code Ann. § 44-6-10 et seq. (South Carolina Medicaid);
• ☐ S.C. Code Ann. § 62-7-101 et seq. (South Carolina Trust Code).

1.3 Purpose. The exclusive purposes of this Trust are:

• ☐ To enable the Grantor, whose gross monthly income exceeds the Medicaid Cap (300% of the SSI Federal Benefit Rate), to satisfy the income-eligibility requirements for SCDHHS Medicaid Nursing Home (NH), Home and Community Based Services (HCBS), or General Hospital (GH) long-term care benefits;
• ☐ To hold income of the Grantor in a manner that excludes such income from countable income for SCDHHS Medicaid eligibility under MPPM Chapter 304;
• ☐ To pay, in the order required by SCDHHS, the Grantor's personal needs allowance, any community-spouse income allowance, dependent allowances, health insurance premiums, post-eligibility medical expenses, and the Grantor's patient-pay liability to the long-term care provider.

1.4 Irrevocability. This Trust is IRREVOCABLE. Grantor expressly waives any power to revoke, amend, alter, or terminate this Trust except to the extent reformation is required to comply with 42 U.S.C. § 1396p(d)(4)(B) or SCDHHS MPPM Chapter 304.

ARTICLE II. FUNDING OF TRUST

2.1 Permissible Trust Corpus. The corpus of this Trust shall consist EXCLUSIVELY of the Grantor's income, including but not limited to:

• ☐ Social Security retirement, disability, or survivor benefits (RSDI);
• ☐ Supplemental Security Income (SSI), if applicable;
• ☐ Veterans Administration benefits;
• ☐ South Carolina Retirement System (SCRS) or other pension/annuity payments;
• ☐ Private pension, IRA distributions, or annuity payments;
• ☐ Railroad Retirement benefits;
• ☐ Interest, dividends, or other unearned income of the Grantor;
• ☐ Wages or earned income of the Grantor (if any).

2.2 Prohibition on Funding with Resources. No resource, asset, or property of the Grantor (other than income as defined under SSI methodology and SCDHHS MPPM Chapter 304) shall be placed into this Trust. Deposits of resources may invalidate the Trust under SCDHHS policy.

2.3 Separate Trust Account. The Trustee shall open and maintain a separate trust bank account, titled as required by SCDHHS, in substantially the following form:

"[TRUSTEE NAME], Trustee of the [GRANTOR NAME] Medicaid Income Trust, EIN: [__-_______]"

• ☐ The account may be held only in the name of the Beneficiary and the Trustee;
• ☐ An existing or newly opened bank account may be used, provided it is dedicated solely to this Trust;
• ☐ Income shall be deposited each month sufficient to bring the Grantor's countable income below the Medicaid Cap.

2.4 SCDHHS Form FM 905. The Grantor and Trustee shall complete and submit SCDHHS Form FM 905 (Medicaid Income Trust Application) together with this Trust instrument to SCDHHS for legal review prior to eligibility determination.

ARTICLE III. TRUSTEE POWERS AND DUTIES

3.1 Appointment of Trustee. The Grantor appoints [TRUSTEE FULL LEGAL NAME], of [TRUSTEE ADDRESS], as initial Trustee. Pursuant to SCDHHS policy, the Grantor/Beneficiary may NOT serve as Trustee. A Durable Power of Attorney may serve as Trustee, provided the agent is not the Grantor.

3.2 Successor Trustee. Upon the death, resignation, incapacity, or removal of the initial Trustee, [SUCCESSOR TRUSTEE FULL LEGAL NAME] shall serve as Successor Trustee.

3.3 Mandatory Monthly Disbursements. The Trustee shall, on a monthly basis and in the order of priority prescribed by SCDHHS MPPM Chapter 304, disburse all funds deposited into the Trust during the prior month:

• ☐ First: Personal Needs Allowance to the Grantor in the amount permitted by SCDHHS (currently set by SCDHHS regulation);
• ☐ Second: Community Spouse Monthly Income Allowance (if applicable) pursuant to 42 U.S.C. § 1396r-5;
• ☐ Third: Family/dependent allowance (if applicable);
• ☐ Fourth: Health insurance premiums (Medicare Parts B and D, Medigap, long-term care insurance);
• ☐ Fifth: Incurred medical expenses not subject to payment by Medicare or other third-party payers;
• ☐ Sixth: Patient liability ("patient pay") to the long-term care facility or HCBS provider;
• ☐ Seventh: Reasonable trustee and bank fees (subject to SCDHHS review).

3.4 No Discretionary Distributions. The Trustee shall have NO DISCRETION to accumulate funds in the Trust, to make distributions inconsistent with Section 3.3, or to apply funds for the benefit of any person other than the Grantor during the Grantor's lifetime (except as expressly authorized by MPPM Chapter 304).

3.5 Fiduciary Duties. The Trustee shall comply with the duties of a trustee under S.C. Code Ann. § 62-7-101 et seq., including the duties of loyalty, prudence, impartiality, and accounting.

3.6 Accounting and Reporting. The Trustee shall:

• ☐ Maintain complete records of all deposits and disbursements;
• ☐ Provide SCDHHS with copies of bank statements and trust accountings upon request;
• ☐ File any required federal and South Carolina tax returns under the Trust's EIN;
• ☐ Notify SCDHHS within ten (10) days of any change in trustee or material change in the Grantor's circumstances.

ARTICLE IV. STATE REIMBURSEMENT — RESIDUAL BENEFICIARY

4.1 SCDHHS as Residual Beneficiary. As required by 42 U.S.C. § 1396p(d)(4)(B)(ii), MPPM Chapter 304, and S.C. Code Ann. § 44-6-150, upon the death of the Grantor, the South Carolina Department of Health and Human Services shall receive all amounts remaining in this Trust up to an amount equal to the total medical assistance paid on behalf of the Grantor under the South Carolina State Medicaid Plan.

4.2 Notification of Death. Within thirty (30) days of the Grantor's death (or upon closure of the Medicaid case for any other reason), the Trustee shall notify, in writing:

• ☐ South Carolina Department of Health and Human Services, Third Party Liability/Estate Recovery Unit, P.O. Box 100101, Columbia, SC 29202-3101;
• ☐ The Probate Court of [_______________] County, South Carolina.

4.3 Estate Recovery. Pursuant to S.C. Code Ann. § 44-6-150 and federal law, SCDHHS shall be reimbursed from the Trust corpus and any other recoverable estate of the Grantor for all Medicaid services rendered.

4.4 No Distribution Prior to SCDHHS Reimbursement. No distribution to any other person or entity shall be made before SCDHHS's reimbursement claim is satisfied in full.

4.5 Remainder Beneficiaries (Contingent). Only after SCDHHS's claim has been satisfied in full, any remaining trust corpus shall be distributed to:

ARTICLE V. GENERAL PROVISIONS

5.1 Governing Law. This Trust shall be construed under the laws of the State of South Carolina, including S.C. Code Ann. § 62-7-101 et seq. (S.C. Trust Code), S.C. Code Ann. § 44-6-10 et seq. (S.C. Medicaid), 42 U.S.C. § 1396p, and applicable federal Medicaid regulations and SCDHHS policy (MPPM Chapter 304).

5.2 Jurisdiction of Probate Court. Pursuant to S.C. Code Ann. § 62-1-302, the Probate Court of [_______________] County, South Carolina, shall have concurrent jurisdiction over matters relating to the administration and construction of this Trust.

5.3 Severability and Reformation. If any provision of this Trust is held invalid or inconsistent with 42 U.S.C. § 1396p(d)(4)(B) or SCDHHS MPPM Chapter 304, that provision shall be reformed to comply, and the remaining provisions shall continue in full force.

5.4 No Spendthrift Provision Limiting State. Notwithstanding any other provision of this Trust, no spendthrift, anti-alienation, or similar restriction shall apply against SCDHHS's right of recovery.

5.5 SCDHHS Review and Approval. The Grantor and Trustee acknowledge that this Trust must be reviewed and approved by SCDHHS prior to Medicaid eligibility determination, and shall provide such additional documentation as SCDHHS may require.

ARTICLE VI. EXECUTION

IN WITNESS WHEREOF, the Grantor and Trustee have executed this Medicaid Income Trust on the date first above written.

GRANTOR / SETTLOR

[________________________________________]
[GRANTOR FULL LEGAL NAME], Grantor

Date: [__/__/____]

TRUSTEE — ACCEPTANCE

I, the undersigned, accept the appointment as Trustee and agree to administer this Trust in accordance with its terms, the S.C. Trust Code, federal Medicaid law, and SCDHHS Medicaid Policy and Procedures Manual Chapter 304.

[________________________________________]
[TRUSTEE FULL LEGAL NAME], Trustee

Date: [__/__/____]

WITNESSES

NOTARY ACKNOWLEDGMENT (South Carolina)

STATE OF SOUTH CAROLINA
COUNTY OF [_______________]

On this [____] day of [_______________], 20[____], before me, the undersigned notary public, personally appeared [GRANTOR 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 executed the instrument.

WITNESS my hand and official seal.

[________________________________________]
Notary Public — State of South Carolina

My commission expires: [__/__/____]

[NOTARY SEAL]

ATTACHMENTS / EXHIBITS

• ☐ Exhibit A: Schedule of Grantor's Monthly Income Sources
• ☐ Exhibit B: Trust Bank Account Information (institution, account number, EIN)
• ☐ Exhibit C: SCDHHS Form FM 905 — Medicaid Income Trust Application
• ☐ Exhibit D: SCDHHS Notice of Income-Cap Determination
• ☐ Exhibit E: Personal Needs Allowance and Patient-Pay Calculation Worksheet

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — Federal Qualified Income Trust statute
• SCDHHS Medicaid Policy and Procedures Manual (MPPM), Chapter 304 — Nursing Home / HCBS / General Hospital, Income Cap and Income Trust: https://img1.scdhhs.gov/mppm/
• SCDHHS Form FM 905 — Medicaid Income Trust Application: https://www.scdhhs.gov/sites/default/files/FM%20905.pdf
• S.C. Code Ann. § 44-6-10 et seq. — South Carolina Medicaid
• S.C. Code Ann. § 44-6-150 — Medicaid Estate Recovery
• S.C. Code Ann. § 62-7-101 et seq. — South Carolina Trust Code
• S.C. Code Ann. § 62-1-302 — Probate Court jurisdiction over trusts
• South Carolina Department on Aging, "Medicaid Income Trust" Fact Sheet
• SCDHHS Program Eligibility and Income Limits: https://www.scdhhs.gov/members/program-eligibility-and-income-limits