What is an Income Only Trust Arizona a.k.a. Miller Trust and how does it help qualify for ALTCS?
Think of the income only trust Arizona as a “Funnel” with spouts on its side as well as the bottom.
The person applying for ALTCS sets up their or assigns their total income in arizona to the Income Only Trust or think of the income as poured into the Trust.
Note that married couples’ income is separate, and the healthy (non-applicant) spouses’ income is not placed in the trust. Also noteworthy the healthy spouse can have unlimited income. Meaning just that “unlimited”!
Income that is transferred to the Trust can only be used for the applicant’s allowable expenses. Only income can be placed in the trust and only medical and care expenses can be paid with funds in the trust.
These expenses include:
1: The Monthly Personal Needs Allowance, which for 2023 is $137.10. This is the monthly allowance for the applicant for personal needs, like hair cuts and church contributions.
2: Any Medicare and dental insurance premiums
3: Medical expenses that are not covered by the program.
If married, additional income might be allowed for the well spouse. This is called the Community Spouse Resource Allowance. This can help pay their living expenses. This can be confusing because as already mentioned the well spouse can have unlimited income. But they are also allowed the “Minimum Monthly
Then the balance of the income flows out of the bottom of the funnel and is used to the share of cost for the care home or community. Or I like to call the “co-pay”.
Once set up “wall-la”, Income is no longer a bar from being approved.
So how do you get an Income Only Trust Arizona prepared?
Cecilia Dabbs is a Legal Document Preparer and is legally able to prepare the “Income Only Trust” Document.
Steve Dabbs is a Certified Medicaid Planner in Arizona. He is a husband of Cecilia Dabbs.
For Care Funding Solutions ALTCS planning clients the document is prepared by Cecilia at no additional cost and Steve Dabbs, CMP will spend as much time as needed with the family explaining the steps on how to set up a “Zero balance” bank account and how to administer the trust.
Contact us for Free Consultation!
Why do you need an “Income Only Trust”?
There are 24 Income Cap states, including Arizona. In Income Cap states, if your income is even $1.00 over then, you will be disqualified for benefits. The exact problem happened in Colorado, also an Income Cap state. Here L. Jeanette Miller was the “Representative Plaintiff” for her mother, Lottie Bernice Ham. Join in the lawsuit Miller v. Ibarra were three other plaintiffs.
Therefore the name “Miller Trust.” Irene Ibarra, the Executive Director of the Colorado Department of Social Service, filed a lawsuit in the United States District Court in Denver, Colorado.
What caused the issue?
Her mother was on Medicaid for over four years; then, she started receiving Veterans Pension benefits once her husband passed. The pension caused her income to be above the cap. So the on September 19, 1988, the district court of Jefferson County ordered Lottie’s entire income to be placed in a Trust, and the rest is history.
The Miller Trust was born. In Arizona, it’s called an “Income Only Trust”. Other states call it a “Qualified Income Trust.”
Read about Arizona Long Term Care System.
Three Income Only Trust Arizona Packages to choose from.
- Premium IOT Package
Complete support – Even be on the phone when you are at the bank setting up the account. Call for non-client pricing.
- Complete IOT Package
- Do it yourself Package
Schedule a "FREE" Financial and Medicaid Assessment Here.
Instructions to the Trustee for the Income Only Trust – IOT a.k.a (Miller Trust)
(For Legal Document Solutions Trust Clients Use Only)
Warning proper administration of the Income Only Trust is required. This is not a DIY project. Contact a CMP or law office for assistance.
Step One: The Trust is signed and notarized by the “Trustor” or their POA**. The Trustor is the person who needs the income-only Trust to qualify for “ALTCS Benefits” because their income exceeds the income limit. Note that both the Trustor and Trustee’s signatures must be notarized. The Trustee is the person who manages the Trust.
Step Two: Open a $0 balance account at a bank. We’ve found that Bank of America, Chase, and Wells Fargo have experience with this type of bank account. They may be more familiar with the term “Miller Trust,” rather than what the “State of Arizona” calls it, which is an “Income Only Trust.” This Trust is also called a “Qualified Income Trust” in some states.
The account must be opened with a $0 balance! Also, you must get a bank statement from the banker while you are there that will prove that the account was opened with no money. You will need that during the application process later.
Now at the same time, once the account is open while you are at the bank branch, deposit the exact amount of that month’s income from one or more of the income sources. (Be sure to separate the deposits by the source of income, ie. Social Security income is deposited separately, then make another deposit for each source of income separately. Do not combine them into one deposit, and do it that day. The Trust is not valid until it has been funded.
This seems simple enough but is often done wrong by the new and inexperienced Trustee. Here’s an example in plain language.
Mary’s income exceeds the income cap by $1.00. So she was denied ALTCS/Medicaid benefits. Mary has three sources of income her Social Security of $1,599, an annuity for
$172.23 per month, and a pension from a former employer of $1,343.01 per month.
Mary’s Trustee, while at the bank opening the Zero Balance bank account. Asks for a printed statement that the account’s balance is ZERO! He keeps that for his records. (The ALTCS caseworker will request this)
Next, the Trustee makes a deposit of $172.23, and now the Trust is officially funded. The Trustee makes another deposit of $1,343.01 to match the Pension.
Step Three: Have all income assigned to the Trust (forms provided) and change the account so that no taxes** or any deductions** are subtracted from the gross payments. Other than “Part B” Medicare.
**This is vitally important not to have taxes taken out from now on. Tell the pension company or income source this is required by state law.
Step Four: Submit Proof to ALTCS that the Trust is in place.
The trust document is used to prove that the person who is applying for ALTCS has set up an IOT. It tells ALTCS who created the Trust and that the total amount of the gross income has been assigned to the IOT. Be sure to have all tax withholding stopped, the your case will be denied if this is not done.
- Provide a copy of the request to stop deductions for withholding taxes, life insurance premiums, and union dues from the income going into the Trust, if applicable;
Income Only Trust pg. 1 of 4
- The account statements from the date the trust account was opened to show that the account was funded with all or part of the customer’s current monthly income and previously had a zero AND IT WILL PROVE THAT THE TRUST ACCOUNT HAS BEEN USED ONLY FOR HEALTH CARE!
- For financial accounts containing trust assets, all account statements from the date the trust account were opened through the current day of the month; and
- Proof of total countable
- Lastly, provide copies of the request to have future deposits made to the IOT, and again with no taxes taken
From time to time, the State of Arizona- ALTCS makes changes to what they want the trust language to say, notify Legal Document Solutions, LLC of any request to change the trust document by the State of Arizona; we will update the Trust at no charge
If your bank’s legal department requests a change, we will update the Trust to comply with the bank. Note that change requests from the bank may conflict with ALTCS and cause the application to be denied.
** POA must have the power to establish Trust.
Contact Steve Dabbs at 480-967-8477 with any questions on the Trust.