Texas Miller Trust / Qualified Income Trust (QIT)

TEXAS QUALIFIED INCOME TRUST (MILLER TRUST) AGREEMENT

TRUST CAPTION

ARTICLE I. ESTABLISHMENT AND PURPOSE

1.01 Creation. This Qualified Income Trust ("Trust") is created on [__/__/____] by [SETTLOR NAME] ("Settlor"), an individual residing in [__________] County, Texas, who is an applicant for or recipient of Medicaid benefits administered by the Texas Health and Human Services Commission ("HHSC").

1.02 Statutory Basis. This Trust is established pursuant to:

• (a) Section 1917(d)(4)(B) of the Social Security Act, 42 U.S.C. § 1396p(d)(4)(B);
• (b) 1 Texas Administrative Code § 358.339(c) (Qualified Income Trust);
• (c) Chapter 32 of the Texas Human Resources Code; and
• (d) the Texas Trust Code, Tex. Prop. Code §§ 111.001–117.012.

1.03 Purpose. The sole purpose of this Trust is to enable the Settlor to qualify for long-term care Medicaid (including institutional care and §1915(c) Home and Community-Based Services waiver programs administered by HHSC, such as STAR+PLUS) under the special income limit equal to 300% of the SSI Federal Benefit Rate by diverting the Settlor's countable income into this Trust during the calendar month of receipt, in conformity with 1 T.A.C. § 358.339(c).

1.04 Income-Cap Recognition. The Settlor's gross monthly income exceeds the applicable Texas Medicaid special income limit. Without this Trust, the Settlor would be income-ineligible. The funds deposited into this Trust shall not be counted as available income for Medicaid eligibility determinations in an institutional setting or §1915(c) waiver setting.

ARTICLE II. IRREVOCABILITY

2.01 Irrevocable. This Trust is IRREVOCABLE. The Settlor may not revoke, rescind, amend, alter, modify, or terminate this Trust, in whole or in part, except as required to comply with applicable federal or Texas Medicaid law or by court order.

2.02 No Power to Withdraw Corpus. Neither the Settlor nor any beneficiary other than the Residuary Beneficiary (the State of Texas) shall have any power to compel distributions from the Trust except as expressly authorized by Article V.

ARTICLE III. TRUST RES; FUNDING

3.01 Corpus. The corpus of this Trust shall consist solely of the Settlor's income, including accumulated income thereon, as required by 1 T.A.C. § 358.339(c)(2)(B). No resources of the Settlor or any other person shall be deposited into this Trust, except that nominal amounts (typically $10–$20) may be used to open the Trust bank account without invalidating the Trust.

3.02 Identified Income Sources. The following income source(s) shall be deposited into this Trust in full during the calendar month of receipt:

☐ Social Security retirement / disability benefits
☐ Pension: [_______________________________]
☐ Annuity: [_______________________________]
☐ VA benefits (excluding aid and attendance / housebound allowance)
☐ Other: [________________________________]

3.03 Entire-Source Rule. For each income source identified above, the entire amount of that source must be deposited into the Trust during the month of receipt. Partial deposits of an identified source invalidate the Trust as to that month, except as permitted in the initial month under HHSC MEPD Handbook F-6820.

3.04 Trust Account. The Trustee shall open and maintain a separate, dedicated bank account in the name of the Trust at a federally insured financial institution located in Texas. The Settlor's Social Security Number may be used as the Trust's taxpayer identification number, consistent with IRS guidance for grantor trusts.

ARTICLE IV. TRUSTEE

4.01 Initial Trustee. The initial Trustee shall be [TRUSTEE NAME], residing at [_______________________________________].

4.02 Successor Trustee. If the initial Trustee resigns, becomes incapacitated, dies, or otherwise ceases to serve, the successor Trustee shall be [SUCCESSOR TRUSTEE NAME].

4.03 Trustee Powers. Subject to the restrictions of this Trust, the Trustee shall have all powers granted to trustees under Texas Property Code Chapter 113, exercised solely to carry out the limited distribution scheme of Article V.

4.04 Trustee Duties. The Trustee shall:

• (a) Receive and deposit the Settlor's identified income source(s) into the Trust account each calendar month;
• (b) Make distributions in the order and amounts required by Article V;
• (c) Maintain complete, contemporaneous accounting records and bank statements;
• (d) File any required fiduciary tax returns (although the Trust is a grantor trust for federal income tax purposes);
• (e) Notify HHSC of the Settlor's death within thirty (30) days; and
• (f) Provide an accounting to HHSC upon request.

4.05 Bond. The Trustee shall serve without bond unless otherwise ordered by a court of competent jurisdiction.

ARTICLE V. DISTRIBUTIONS DURING SETTLOR'S LIFE

The Trustee shall make distributions each calendar month, in the following order of priority and only from funds deposited in that month (or accumulated income), strictly in accordance with 1 T.A.C. § 358.339(c) and HHSC MEPD Handbook F-6800 et seq.:

5.01 Personal Needs Allowance. Pay to the Settlor (or to the institution for credit to the Settlor's personal needs account) the monthly Personal Needs Allowance authorized by HHSC.

5.02 Spousal Maintenance. Pay to the Settlor's community spouse, if any, the Minimum Monthly Maintenance Needs Allowance (MMMNA) and any incremental income allowance authorized by 42 U.S.C. § 1396r-5 and HHSC.

5.03 Family Allowance. Pay any Family Allowance authorized for dependent family members.

5.04 Health Insurance Premiums. Pay the Settlor's Medicare Part B premium, Medicare supplement premiums, and any other health-insurance premiums approved by HHSC.

5.05 Incurred Medical Expenses. Pay non-covered medical expenses approved by HHSC.

5.06 Applied Income (Co-Payment). Pay the remaining balance to the nursing facility, assisted living facility, or §1915(c) waiver service provider as the Settlor's applied income / co-payment toward the cost of care, in the amount calculated by HHSC.

5.07 Trustee Compensation. Reasonable Trustee compensation and necessary trust administration expenses (e.g., bank fees) may be paid only to the extent permitted by HHSC policy and 1 T.A.C. § 358.339.

5.08 No Other Distributions. The Trustee shall make no other distributions during the Settlor's lifetime. Funds paid directly to the Settlor (other than the Personal Needs Allowance) or otherwise spent for the Settlor's benefit outside this priority list are countable income for Medicaid eligibility purposes.

ARTICLE VI. DEATH OF SETTLOR — STATE AS RESIDUARY BENEFICIARY

6.01 Mandatory State Payback. Upon the death of the Settlor, the Trustee shall, before any other distribution, pay to the State of Texas, through the Texas Health and Human Services Commission, all amounts remaining in the Trust up to the total amount of medical assistance paid by Medicaid on behalf of the Settlor, as required by 42 U.S.C. § 1396p(d)(4)(B)(iii) and 1 T.A.C. § 358.339(c)(1).

6.02 HHSC Notification and Claim. The Trustee shall, within thirty (30) days of the Settlor's death:

• (a) Notify the HHSC Medicaid Estate Recovery Program (MERP) and the HHSC Office of Inspector General;
• (b) Request a statement of the total Medicaid benefits paid; and
• (c) Pay the State's claim from Trust assets before any other distribution.

6.03 Estate Recovery Coordination. This Trust's payback obligation is in addition to any rights HHSC may assert under the Texas Medicaid Estate Recovery Program against the Settlor's probate estate.

6.04 Residual Distribution. After full satisfaction of the State's claim, any remaining Trust assets shall be distributed to:

[_______________________________________] (relationship: [_____________________])

or, if such person does not survive, to the Settlor's heirs at law determined under the Texas Estates Code.

ARTICLE VII. PROHIBITED ACTIONS

7.01 The Trustee shall not:

• (a) Deposit any resource (as opposed to income) of the Settlor or any third party into the Trust, except nominal account-opening amounts;
• (b) Deposit only a portion of an identified income source;
• (c) Use Trust funds to purchase eligibility for a §1915(c) waiver in violation of 1 T.A.C. § 358.339(c)(4)(D);
• (d) Make any distribution that would render the Settlor income-ineligible;
• (e) Lend Trust assets to the Settlor or any third party; or
• (f) Commingle Trust funds with the Trustee's personal funds or any other account.

ARTICLE VIII. TAX MATTERS

8.01 Grantor Trust. This Trust is a grantor trust under 26 U.S.C. §§ 671–679. All items of income, deduction, and credit shall be reported on the Settlor's individual income tax return. The Settlor's Social Security Number may be used as the Trust's taxpayer identification.

ARTICLE IX. GOVERNING LAW; CONSTRUCTION

9.01 Governing Law. This Trust is governed by the laws of the State of Texas, including the Texas Trust Code (Tex. Prop. Code §§ 111.001–117.012), and by applicable federal Medicaid law.

9.02 Federal Conformity. Any provision of this Trust that would disqualify it as a Qualified Income Trust under 42 U.S.C. § 1396p(d)(4)(B) or 1 T.A.C. § 358.339 shall be construed, reformed, or severed as necessary to preserve qualification.

9.03 Severability. If any provision is held invalid, the remaining provisions shall continue in full force and effect.

ARTICLE X. EXECUTION

EXECUTED on this [____] day of [_______________], [______], in [__________] County, Texas.

SETTLOR

TRUSTEE — ACCEPTANCE

The undersigned accepts appointment as Trustee and agrees to administer this Trust in accordance with its terms, 42 U.S.C. § 1396p(d)(4)(B), and 1 T.A.C. § 358.339.

NOTARIAL ACKNOWLEDGMENT — TEXAS

STATE OF TEXAS

COUNTY OF [______________________]

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

____________________________________
Notary Public, State of Texas
My commission expires: [__/__/____]
(SEAL)

STATE OF TEXAS

COUNTY OF [______________________]

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

____________________________________
Notary Public, State of Texas
My commission expires: [__/__/____]
(SEAL)

SCHEDULE A — INITIAL FUNDING / IDENTIFIED INCOME SOURCES

Nominal account-opening deposit: $[______] (Settlor's resources or other party's funds; not gift income; not corpus).

Trust bank account information:

• Financial institution: [_______________________________]
• Account number: [____________________]
• Date account opened: [__/__/____]

EXECUTION CHECKLIST

☐ Confirm Settlor's gross monthly income exceeds the current Texas special income limit (300% SSI FBR)
☐ Confirm Settlor meets medical-necessity and resource tests
☐ Identify each income source that will be diverted (entire source — no fractional deposits)
☐ Confirm Settlor is applying for institutional Medicaid or §1915(c) waiver (not Community Attendant Services)
☐ Verify Settlor's capacity, or that Agent's Statutory Durable Power of Attorney expressly authorizes trust transactions (Tex. Est. Code § 752.114)
☐ Execute Trust before Settlor's first month of Medicaid coverage
☐ Open dedicated Trust bank account; nominal opening deposit only
☐ Notarize Settlor's and Trustee's signatures
☐ Send signed Trust instrument and bank documentation to HHSC eligibility worker
☐ Establish monthly deposit and applied-income payment workflow
☐ Calendar annual review of special income limit and HHSC policy changes
☐ Provide copy to community spouse (if any) and successor Trustee

SOURCES AND REFERENCES

• 42 U.S.C. § 1396p(d)(4)(B) — Federal Qualified Income Trust authority
• 1 Tex. Admin. Code § 358.339 — HHSC treatment of trusts (controlling QIT rule)
• Tex. Hum. Res. Code § 32.026 — Texas Medicaid program
• Tex. Prop. Code §§ 111.001–117.012 — Texas Trust Code
• Texas HHSC, Medicaid for the Elderly and People with Disabilities Handbook, Section F-6800 et seq. — QIT operational guidance
• Texas HHSC MEPD Handbook Appendix XXXVI — Qualified Income Trusts (QITs) and MEPD Information
• Miller v. Ibarra, 746 F. Supp. 19 (D.N.M. 1990) — Origin of "Miller Trust"
• Texas HHSC Estate Recovery Program (MERP), 1 T.A.C. § 373.101 et seq.