The purpose of this post is to explain why using a formatted will or trust document found from any number of Google searches can be harmful to both you and the family members who survive you.
One possible and underutilized tool of estate planning is a Miller Trust. For a high percentage of the clients who come to see us, a major concern is qualifying for nursing home assistance Medicaid, while still leaving some of their assets for their children or other descendants. These individuals want to make sure that they are able to qualify for the assistance they may need to pay for a nursing home without leaving their family to pay funeral expenses out of pocket or with nothing to transfer to their heirs. Our clients do not want to see their hard earned money pass to the government rather than their family members. A Miller Trust (also referred to as a Qualified Income Trust) can help the clients just described. This type of trust is an instrument used for individuals that have an income over the Medicaid qualification limit, which is currently $2,199. Some people may think this is not something they should necessarily worry about, however, if you are an individual with a pension, 401K or other retirement income or you are the spouse of a deceased individual with one of these before mentioned sources of income, then it is likely that you will be well over the maximum income allowed.
Miller Trusts consist of funds that are deposited into a special bank account called a Qualified Income Trust account. The funds in this bank account are not counted as income for determining eligibility for Medicaid. By depositing the excess income into this account, the applicant can become eligible for nursing home assistance Medicaid. Although the process of forming this bank account can be fairly simple, it is necessary to provide the county Department of Family and Children Services with a copy of your trust document. This document is then sent to the Department of Community Health for approval by their legal section. I have not found any form trust documents which can provide individuals with the format necessary. I also believe that most people do not even know this is an option nor do they understand the process well enough to be able to do this on their own. That is where we, the Estate Planning Associates of Webb, Tanner & Powell, can be of assistance.
The downfall of a Miller Trust is that on the death of an individual, the state will receive all amounts remaining in the trust up to the amount that has been paid on behalf of the individual by Medicaid. However, funds must only be deposited into this account on a monthly basis and therefore individuals may not have a substantial number of funds in the trust account at their death. The “Look Back” period for Medicaid eligibility is also a complicated formula which we have become educated in due to the need and questions of our clients.
I hope that this article has served as at least an introduction to the benefits that advanced planning can have to individuals.