Md. Code Regs. 10.09.24.08-2

Current through Register Vol. 51, No. 25, December 13, 2024

Section 10.09.24.08-2 - Treatment of Trust Amounts

A. For the purpose of this regulation, "trust" has the meaning defined under Regulation .08-1A of this chapter.

B. Treatment of Trusts Established after August 10, 1993.

(1) In determining eligibility for Medical Assistance for any period under consideration beginning on or after October 1, 1993, in the case of trusts established after August 10, 1993, an individual shall be considered to have established a trust if assets of the individual as defined under Regulation .08-1A of this chapter were used to form all or part of the corpus of the trust and if any of the following persons established the trust other than by will:

(a) The individual;

(b) The individual's spouse;

(c) A person, including a court or administrative body:

(i) With legal authority to act in place of or on behalf of the individual or the individual's spouse, or

(ii) Acting at the direction or upon the request of the individual or the individual's spouse.

(2) In the case of a trust, the corpus of which includes assets of one of the individuals described under §B(1)(a) or (b) of this regulation and assets of any other individual or individuals, the provisions of this regulation apply to the portion of the trust attributable to the assets of the individual described under §B(1)(a) or (b) of this regulation.

(3) The provisions of this regulation apply without regard to:

(a) The purposes for which a trust is established;

(b) Whether the trustees have or exercise any discretion under the trust;

(c) Restrictions on when or whether distributions may be made from the trust; or

(d) Restrictions on the use of distributions from the trust.

(4) Revocable Trusts. In the case of a revocable trust:

(a) The corpus of the trust shall be considered resources available to the individual;

(b) Payments from the trust to, or for the benefit of, the individual shall be considered income of the individual; and

(c) Other payments from the trust shall be considered assets disposed of by the individual.

(5) Irrevocable Trust. In the case of an irrevocable trust, if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual:

(a) The portion of the corpus from which, or the income on the corpus from which, payment to the individual could be made shall be considered resources available to the individual, and payments from that portion of the corpus or income:

(i) To or for the benefit of the individual, shall be considered income of the individual, and

(ii) For any other purpose, shall be considered a transfer of assets; and

(b) A portion of the trust from which, or any income on the corpus from which, a payment could not, under any circumstances, be made to the individual shall be considered to be assets disposed of by the individual, as of the date of establishment of the trust or, if later, the date on which payment to the individual was foreclosed. The value of the trust shall be determined, for purposes of evaluating the disposal, by including the amount of any payments made from that portion of the trust after the date of establishment or foreclosure.

(6) The following trusts may not be counted in determining eligibility for Medical Assistance:

(a) Special needs trusts as defined in §C of this regulation; and

(b) A pooled special needs trust containing the assets of an individual who is disabled, and which meets all of the following conditions:

(i) The trust is established and managed by a nonprofit association,

(ii) A separate account is maintained for each beneficiary of the trust but, for purposes of investment and management of funds, the trust pools these accounts,

(iii) Accounts in the trust are established solely for the benefit of disabled individuals by the parent, grandparent, or legal guardian of the individuals, by the individuals, or by a court, and

(iv) To the extent that amounts remaining in the beneficiary's account upon the death of the beneficiary are not retained by the trust, the trust pays to the Department from the amounts remaining in the account an amount equal to the total amount of Medical Assistance paid on behalf of the beneficiary.

(7) A nonprofit association that establishes and manages a trust consistent with the requirements of §B(6)(b) of this regulation may establish accounts for individuals for whom no governmental entity has made a determination of disability, provided that:

(a) The beneficiary of the account has submitted, or is actively engaged in preparing to submit, an application to:

(i) The Social Security Administration for Supplemental Security Income or Social Security Disability Insurance; or

(ii) The Department of Human Services State Review Team for a disability determination using the Social Security Administration rules; and

(b) The account is closed immediately upon a determination, exclusive of appeals, by any State or federal governmental agency that the beneficiary of the account is not disabled.

C. Special Needs Trust. The following criteria shall define a single, stand-alone special needs trust that is funded with assets that belonged to the beneficiary:

(1) The trust is irrevocable;

(2) The trust states that the beneficiary is disabled under Regulation .05-4B of this chapter;

(3) The beneficiary of the trust is younger than 65 years old at the time the trust is established and funded;

(4) The trust has been established by:

(a) The beneficiary;

(b) The beneficiary's parent;

(c) The beneficiary's grandparent;

(d) The beneficiary's legal guardian; or

(e) A court;

(5) The trust does not contain provisions that conflict with the policies set forth under this regulation;

(6) The trust provides that all states which have provided medical assistance benefits to the beneficiary shall be paid their proportionate share of the total amount of medical assistance benefits paid on behalf of the beneficiary by all states, up to the amount of assets remaining in the trust upon the death of the beneficiary;

(7) If the trust allows for the termination of the trust before the death of the beneficiary, the trust shall provide that:

(a) All states which have provided medical assistance benefits to the beneficiary shall be paid their proportionate share of the total amount of medical assistance benefits paid on behalf of the beneficiary by all states, up to the amount of assets remaining in the trust at the time of termination, after administrative expenses related to the termination of the trust;

(b) Other than amounts paid to the states under §C(7)(a) of this regulation and payment of administrative expenses and reasonable compensation to the trustee for trust management, along with reasonable costs associated with investment, legal, or other services, no entity other than the trust beneficiary may benefit from early termination of the trust; and

(c) The power to terminate shall be held by someone other than the trust beneficiary;

(8) The trust does not permit distribution of trust assets upon termination of the trust that would hinder or delay reimbursement to the states under §C(6) and (7) of this regulation;

(9) The trust does not place time limits, or any other limits, on the states' claim for reimbursement under §C(6) and (7) of this regulation;

(10) The trust contains the following provisions:

(a) Additions may not be made to the trust after the beneficiary is 65 years old;

(b) Expenditures from the trust shall be used for the sole benefit of the beneficiary and shall be directly related to the beneficiary's health care, education, comfort, or support;

(c) The trust beneficiary may not serve as trustee, cotrustee, trust protector, trust advisor, or in any other capacity that would allow the beneficiary to influence or exercise authority or control over distributions from the trust;

(d) The trustee shall administer the trust in accordance with the provisions of Estates and Trusts Article, § 15-502, Annotated Code of Maryland, and may not:

(i) Except for the beneficiary's relative, limited to the relatives defined at COMAR 10.09.24.02B(10)(a), who may have a contingent future interest in any trust funds remaining in the trust after the requirements of §C(6) of this regulation have been met, have an interest in trust assets;

(ii) Have discretion to use trust assets for the trustee's own benefit;

(iii) Self-deal by selling trust assets to the trustees or buying trust assets from the trustee; or

(iv) Loan trust assets to the trustee;

(e) Compensation to the trustee shall be limited in accordance with the provisions of Estates and Trusts Article, § 14.5-708, Annotated Code of Maryland;

(f) Any leases or mortgages that the trust may hold shall contain a provision that they either terminate or become due and payable upon the death of the beneficiary or termination of the trust;

(g) If the trust owns titled property that is valued at more than $500, the property shall be titled in the name of the trust, except for securities, which may be held in the name of a nominee;

(h) If the trust owns an asset jointly with another, the ownership shall be as tenants in common, and the ownership agreement shall provide that, upon termination of the trust, the property shall either be sold for fair market value or the other owners shall purchase the trust's interest in the property for fair market value;

(i) Trust assets may not be held as an ongoing business or enterprise, or as investments in new or untried enterprises;

(j) Trust distributions may not be used to supplement Medical Assistance payments to any health care provider delivering goods or services to the beneficiary;

(k) Trust assets may not be used to purchase gifts;

(l) Trust assets may not be used to purchase a life insurance policy on the life of the beneficiary;

(m) Trust assets may only be used to purchase a life insurance policy on the life of someone other than the trust beneficiary if the trust is the only beneficiary of the life insurance policy;

(n) Trust assets may not be used to purchase an annuity on the life of the beneficiary unless, upon the beneficiary's death, all states which have provided medical assistance benefits to the beneficiary are paid, out of any remaining annuity payments, their proportionate share of the total amount of medical assistance benefits paid on behalf of the beneficiary by all states.

(o) The trust may not loan trust assets without security, which may include an interest in real or personal property of at least equivalent value;

(p) The trust may only make loans if the loan agreement provides for immediate repayment in the event of the death of the beneficiary or termination of the trust for any other reason;

(q) The only real property in which the trust may invest is in a single home property, which is used as the residence of the beneficiary and is titled in the name of the trust;

(r) The trust may not disburse more than $100,000 for the purchase of property without the approval of the State circuit court in the jurisdiction in which the beneficiary resides;

(s) An annual accounting of the trust, including a listing of current assets, income, and itemized distributions during the previous year, shall be sent to the Maryland Medical Assistance Program, Division of Recoveries and Financial Services;

(t) Trust assets may not be used to pay funeral expenses of the beneficiary but may be used to purchase an irrevocable burial contract for the beneficiary to cover the beneficiary's funeral and burial expenses;

(u) The trust may not receive payments from a structured settlement or an annuity that was purchased by funds that are not part of the trust unless:

(i) Upon the beneficiary's death, all states which have provided medical assistance benefits to the beneficiary are paid, out of any remaining annuity or settlement payments, their proportionate share of the total amount of medical assistance benefits paid on behalf of the beneficiary by all states; and

(ii) The beneficiary's right to receive payments from the annuity or structured settlement has been assigned irrevocably to the trust and such assignment was made before the trust beneficiary attains the age of 65;

(11) A copy of the trust shall be sent to the Maryland Medical Assistance Program, Division of Recoveries and Financial Services, and if any amendments are made to the trust, the amendments shall comply with this section and a copy of the amendments shall be sent to the Division of Recoveries and Financial Services;

(12) If the trust agreement fails to comply with any provision of this section, the full value of the assets of the trust shall be considered available resources of the trust beneficiary for Medical Assistance eligibility purposes.

Md. Code Regs. 10.09.24.08-2

Regulation .08-2 amended effective April 29, 2002 (29:8 Md. R. 700)
Regulations .08-2 adopted effective July 3, 1995 (22:13 Md. R. 967); amended effective 43:17 Md. R. 954, eff. 8/29/2016; amended effective 44:7 Md. R. 355, eff. 4/10/2017; amended effective 46:10 Md. R. 485, eff. 5/20/2019