N.Y. Comp. Codes R. & Regs. Tit. 18 §§ 360-4.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 360-4.5 - Availability of assets held in trust

(a) Inter vivos trusts created before August 11, 1993. In determining the initial or continuing eligibility of any person applying for or receiving MA, there must be included in the amount of income and resources considered available to such person the maximum amount of payments that may be permitted to be distributed under the terms of an MA-qualifying trust, assuming the full exercise of discretion by the trustee or trustees. For purposes of this subdivision, an MA-qualifying trust is a trust or similar legal device established by a person or by his/her spouse (the grantor or grantors) other than by will, under which the grantor may be the beneficiary of all or part of the payments from the trust and under which one or more trustees are permitted to exercise any discretion with respect to the distribution to the grantor.

(1) This section applies without regard to:

(i) whether the MA-qualifying trust is irrevocable or is established for purposes other than to enable a grantor to qualify for MA; or

(ii) whether the trustee actually exercise discretion with respect to the distribution of payments to the grantor.

(2) Exception. Any trust or initial trust decree established prior to April 7, 1986 solely for the benefit of a mentally retarded individual who resides in an intermediate care facility for the mentally retarded will be excluded in determining initial or continuing eligibility for MA.

(b) Inter vivos trusts created on or after August 11, 1993. For purposes of this subdivision, an individual will be considered to have created a trust if assets of the individual were used to form all or part of the principal (corpus) of the trust, the trust was established other than by will, and the trust was established by: the individual; the individual's spouse; a person acting at the direction of the individual or the individual's spouse, including a court or administrative body; or a person with the legal authority to act in place of or on behalf of the individual or the individual's spouse, including a court or administrative body. In the case of a trust which contains the assets of an individual and of another person or persons, the provisions of this subdivision apply to the portion of a trust's assets which are attributable to the individual.

(1) Irrevocable trusts created by an applicant/recipient. The availability of assets held in an irrevocable trust to an applicant/recipient depends on the trustee's authority, under the specific terms of the trust agreement, to make payments to or for the benefit of the applicant/recipient.

(i) Any portion of the trust principal, and of the income generated by the trust principal, from which no payments may be made to the applicant/recipient under any circumstances, must be considered to be assets transferred by the applicant/recipient for purposes of section 360-4.4(c) of this Subpart. The date of the transfer in such cases is the date the trust is established or, if later, the date on which payment to the applicant/recipient is foreclosed under the terms of the trust agreement.

(ii) Any portion of the trust principal, and of the income generated from the trust, which can be paid to or for the benefit of the applicant/recipient, under any circumstances, must be considered to be an available resource.

(iii) Payments made from the trust to or for the benefit of the applicant/recipient must be considered to be available income in the month paid.

(iv) Any payments from the trust other than those described in subparagraph (iii) of this paragraph must be considered to be assets transferred by the applicant/recipient for purposes of section 360-4.4(c) of this Subpart.

(2) Revocable trusts created by an applicant/recipient.

(i) The trust principal and the income generated by the trust principal must be considered as an available resource.

(ii) Payments made from the trust to or for the benefit of the applicant/recipient must be considered to be available income in the month paid.

(iii) Any payments from the trust other than those described in subparagraph (ii) of this paragraph must be considered to be assets transferred by the applicant/recipient for purposes of section 360-4.4(c) of this Subpart.

(3) Trusts created by the spouse of an applicant/recipient with the spouse's assets.

(i) Revocable trusts. The availability of trust assets to the spouse is governed by the provisions of paragraph (2) of this subdivision.

(ii) Irrevocable trusts.

(a) The trust principal and the income generated by the trust principal must be considered to be assets transferred by the applicant/recipient for purposes of section 360-4.4(c) of this Subpart.

(b) Payments made from the trust to or for the benefit of the applicant/recipient must be considered to be available income in the month paid.

(4) Trusts created by anyone other than the applicant/recipient or a legally responsible relative, including trusts created pursuant to section 7-1.12 of the Estates, Powers, and Trusts Law. Payments made from the trust to the applicant/recipient are available income in the month received. Neither the principal of such a trust nor any in-kind benefits received by the applicant/recipient as a result of disbursements from the trust will be counted as or deemed to be available income or resources for purposes of determining MA eligibility.

(5) Exceptions.

(i) Notwithstanding the provisions of paragraphs (1)-(4) of this subdivision, the principal and income of the following trusts must not be considered as available income or resources:

(a) A trust containing the assets of a disabled individual if: the trust was created for the benefit of the disabled individual when the disabled individual was under the age of 65; the trust was established by a parent, grandparent, legal guardian, or court of competent jurisdiction; and the trust agreement provides that upon the death of the individual the State must receive all amounts remaining in the trust up to the total value of all MA paid on behalf of the individual.

(b) A trust containing the assets of a disabled individual if: the trust is established and managed by a non-profit association which maintains separate accounts for the benefit of disabled individuals, but for purposes of investment and management of trust funds, pools the accounts; each account in the trust is established solely for the benefit of a disabled individual by the individual, by the parent, grandparent, or legal guardian of the individual, or by a court of competent jurisdiction; and upon the individual's death amounts remaining in the individual's account which are not retained by the trust must be paid to the State up to the total value of all MA paid on behalf of the individual.

(ii) In the event that a lien has been imposed pursuant to the provisions of section 104-b or 369 of the Social Services Law upon the funds which are to be used to establish a trust described in subparagraph (i) of this paragraph, on account of MA provided prior to the date the trust is to be established, such lien must be satisfied or otherwise resolved in order for the assets subject to such lien to be disregarded in determining MA eligibility.

(iii) A trustee of a trust described in subparagraph (i) of this paragraph, in order to fulfill his or her fiduciary obligations with respect to the State's remainder interest in the trust, must:

(a) notify the appropriate social services district of the creation or funding of the trust for the benefit of an MA applicant/recipient;

(b) notify the social services district of the death of the beneficiary of the trust;

(c) notify the social services district in advance of any transactions tending to substantially deplete the principal of the trust, in the case of a trust valued at more than $100,000; for purposes of this clause, the trustee must notify the district of disbursements from the trust in excess of the following percentage of the trust principal and accumulated income: five percent for trusts over $100,000 up to $500,000; 10 percent for trusts valued over $500,000 up to $1,000,000; and 15 percent for trusts over $1,000,000;

(d) notify the social services district in advance of any transactions involving transfers from the trust principal for less than fair market value; and

(e) provide the social services district with proof of bonding if the assets of the trust at any time equal or exceed $1,000,000, unless that requirement has been waived by a court of competent jurisdiction, and provide proof of bonding if the assets of the trust are less than $1,000,000, if required by a court of competent jurisdiction.

(iv) A social services district or the department may commence a proceeding under section 63 of the Executive Law against the trustee of a trust described in subparagraph (i) of this paragraph, if the district or the department considers any acts, omissions, or failures of the trustee to be inconsistent with the terms of the trust, contrary to applicable laws or regulations (including but not limited to this paragraph), or contrary to the fiduciary obligations of the trustee.

(c) Trusts created by will. Payments made from the trust to the applicant or recipient are available income in the month received. Neither the principal of such a trust nor any in-kind benefits received by the applicant or recipient as a result of disbursements from the trust will be counted as or deemed to be available income or resources for purposes of determining MA eligibility.

(d) Any provision of a trust created on or after April 2, 1992 is void if it directly or indirectly limits, suspends, terminates, or diverts the principal, income, or beneficial interest of the grantor or grantor's spouse in the event that the grantor or grantor's spouse applies for MA or requires medical care, without regard to the irrevocability of the trust or the purpose for which the trust was created. The beneficial interest of the grantor or grantor's spouse includes any income or principal amounts to which the grantor or grantor's spouse would be entitled under the terms of the trust, by right or in the discretion of the trustee, assuming the full exercise of discretion by the trustee.

(e) The provisions of subdivision (b) of this section, with respect to trusts created on or after August 11, 1993, also apply to legal instruments and other devices similar to trusts created on or after August 11, 1993. A legal instrument or other device is similar to a trust if, attendant upon its creation, assets are put under the control of an individual or entity with fiduciary obligations to manage such assets for the benefit of a designated beneficiary or beneficiaries. Legal instruments and devices subject to the provisions of subdivision (b) of this section include, but are not limited to, escrow accounts, investment accounts, and pension funds.

N.Y. Comp. Codes R. & Regs. Tit. 18 §§ 360-4.5