This article is a section taken from MA for People Who Are Age 65 or Older or People Who Are Blind or Have a Disability (MA-ABD), a part of the revisions and additions to the Minnesota Health Care Program Eligibility Policy Manual.
A trust is any arrangement in which a grantor transfers property to a trustee or trustees with the intention that it be held, managed, or administered by the trustee(s) for the benefit of certain designated beneficiaries. A trustee holds a fiduciary responsibility to hold or manage the trust’s corpus and income for the benefit of the beneficiaries.
The term “trust” also includes any legal instrument, device or arrangement which may not be called a trust or qualify as a trust under state law, but which is similar to a trust.
Parties to a Trust
A beneficiary is any person(s) designated in the trust instrument as benefiting in some way from the trust. The beneficiary can be the grantor himself or herself, another person(s), or a combination of any of these parties. A beneficiary does not hold legal title to trust property but does have an equitable ownership interest in it. As an equitable owner, the beneficiary has certain rights that will be enforced by a court because the trust exists for his or her benefit. The beneficiary receives the benefits of the trust while the trustee holds the title and duties.
A grantor, also called a settlor or trustor, is the person who provides the trust principal (or corpus). Therefore, a person may be a grantor even if an agent or other person, legally empowered to act on his or her behalf (e.g., a legal guardian, representative payee, person acting under a power of attorney, or conservator), establishes the trust with funds or property that belong to the grantor.
A trustee is any person(s) or entity (such as an insurance company or bank) that manages a trust or similar device and has fiduciary responsibilities. The trustee holds legal title to property for the use and benefit of the beneficiary. In most instances, the trustee has no legal right to revoke the trust or use the property for his or her own benefit.
The availability of trust assets is a critical factor in determining a person’s eligibility. Only trust assets that are determined to be available to the person are considered when determining the person’s eligibility.
Some types of trusts are excluded in whole by federal and state law. These types of trusts include:
- Special Needs Trusts
- Pooled Trusts
Income to the Trust versus Income to the Person
When evaluating a trust it is necessary to distinguish what is considered income to the trust and what is considered income to the person. The terms of the trust will dictate what is considered income to the trust versus income to the person.
Income to the Trust
- Income earned by the trust assets that is retained by the trust
- Income that has been legally assigned to the trust and is directly deposited into the trust
Income to the Person
- Income earned by the trust that is distributed to the person, or for the benefit of the person
- Income received by the person that the person later deposits into a trust
- Income that is directly deposited into a trust that has not been legally assigned to the trust.
Trust Provisions Linked to Public Assistance
Provisions in a trust established on or after July 1, 1992, that provide for suspension, termination, limitation or diversion of the trust corpus or income if the beneficiary applies or receives public assistance or benefits under public health care programs are unenforceable.
This requirement does not apply to Special Needs, supplemental needs and Pooled Trusts.
Minnesota Statutes, section 256B.056, subdivision 3b
Minnesota Statutes, section 501C.1205, subdivision 1
United States Code, title 42, section 1396p(d)
CREDIT: The content of this post has been copied or adopted from the Minnesota Healthcare Programs Eligibility Policy Manual, originally published by the Minnesota Department of Human Services.
This is also part of a series of posts on Minnesota Healthcare Eligibility Policies.