Miller Trusts in Arizona

Do you or a loved one need long-term medical or skilled nursing care in Arizona? Applying for Medicaid benefits can help you or your family afford the high cost of long-term care. However, the government has strict income limits for qualifying for Medicaid. Earning too much income can lead to claim denials despite the fact you might not have enough money to afford long-term care without help.

Fortunately, there may be a solution to this impasse. A Miller Trust can help you manage excess income to qualify for critical long-term care benefits.

Introduction to Miller Trusts in Arizona

In Arizona, individuals and families may use Miller Trusts to ensure that they or a loved one meets the income restrictions for Medicaid long-term care benefits through the Arizona Long Term Care System (ALTCS). A Miller Trust may also be referred to as an “income-only trust,” “qualified income trust,” “qualifying income trust,” “income cap trust,” or “income assignment trust.”

A person sets up a Miller Trust for one reason: to help them qualify for Medicaid benefits for long-term care. Because Medicaid eligibility requirements include an asset and income limit, the program strictly restricts who can receive long-term care benefits. The rising cost of healthcare means that even people with substantial income and assets may still be unable to afford long-term care if they become ill or incapacitated. In these cases, a Miller Trust may be a suitable alternative to meet their medical expenses and other long-term care needs.

A Comprehensive Guide to Miller Trusts

An individual seeking ALTCS benefits can set up a Miller Trust to get below the program’s monthly income limits. They accomplish that goal by redirecting some or all their income to the trust. Examples of income include annuity payments, pension benefits, SSI/SSDI benefits, or Social Security income. Rather than going into the trustor’s personal bank accounts, income payments go directly to the Miller Trust.

Any person eligible for Medicaid/ALTCS can set up a Miller Trust, regardless of age, if they reside or plan to reside in a long-term care facility. A Miller Trust must include several provisions, such as:

  • The trust must name the Medicaid/ALTCS applicant as the primary beneficiary, with the Arizona Health Care Cost Containment System (AHCCCS) named a remainder beneficiary of the trust.
  • The trust’s bank account must begin with a $0 balance (this can pose issues with financial institutions that require an initial deposit to open an account).
  • The trust can receive only the applicant’s income.
  • The trust must receive income in the month the applicant typically receives it.

The trustee of a Miller Trust can use income received by the trust to help pay for the primary beneficiary’s share of the cost of long-term institutional medical or skilled nursing care – the cost of care not covered by ALTCS – so the beneficiary does not have to pay that excess cost from their personal funds. A Miller Trust can also pay a personal needs allowance to the beneficiary.

Once the primary beneficiary passes away, any money remaining in the Miller Trust goes to the state of Arizona to reimburse it for ALTCS benefits. In rare cases when a Miller Trust has funds remaining after reimbursing the state, the trust can pay those funds to other remainder beneficiaries named in the trust document.

Who Needs a Miller Trust?

A Miller Trust can be useful to anyone who requires long-term medical or skilled nursing care but receives monthly income that puts them over the income threshold for ALTCS benefits.

Setting Up a Miller Trust in Arizona

To set up a Miller Trust, an individual applying for ALTCS benefits must execute a trust document containing the legal provisions governing the trust. An estate planning attorney can assist with this task.

The trust document should:

  • Nominate an individual or organization (such as a financial institution, trust company, law firm, or county services organization) to serve as the trustee to manage the trust.
  • Name the ALTCS applicant as the primary beneficiary, with AHCCCS named the priority residual beneficiary upon the primary beneficiary’s death.
  • Specify other residual beneficiaries who should receive any remaining funds if the state of Arizona gets full reimbursement of paid ALTCS benefits.

The applicant setting up the Miller Trust must identify sources of income that will go into the trust, such as pension benefits or Social Security payments. After drafting the trust document, a bank account must be set up to receive the applicant’s income.

Why Choose Pennington Law, PLLC, for Your Miller Trust Needs?

Setting up a Miller Trust requires experience and insight from an experienced legal advisor. For years, people and families across Arizona have turned to the estate planning attorneys at Pennington Law, PLLC, for help with Miller Trusts because:

  • We have extensive estate planning knowledge and provide trusted legal advice to clients from a wide range of financial and personal backgrounds.
  • We offer a sensitive, compassionate approach to our working relationship, recognizing the difficulty of addressing end-of-life issues.
  • We take a comprehensive approach to helping clients manage their financial and personal affairs, helping them secure their wealth for their retirement and family’s future.

If you’ve considered establishing a Miller Trust to help you secure Medicaid benefits for long-term care, contact Pennington Law, PLLC today for an initial consultation.