Rhode Island Code of Regulations › Title 210 - Executive Office of Health and Human Services › Chapter 50 - Medicaid Long-Term Services and Supports › Subchapter 00 - Long-Term Services › Part 6 - Medicaid Long-Term Services and Supports: Financial Eligibility › Section 210-RICR-50-00-6.11 - Treatment of Trusts and the Transfer of Assets

Current through June 14, 2024
A. A
				  trust is an arrangement in which a person, known as the "grantor" transfers
				  property to a trustee with the intention that it be held, managed, or
				  administered by the trustee for the benefit of the grantor or certain
				  designated beneficiaries. The term "trust" also includes any legal instrument
				  or a device similar to a trust. The grantor (or grantor beneficiary)
				  establishes or creates the trust upon signature.
B. The "property" transferred to the trust
				  takes on the form of a fund and may be comprised of any type of a resource
				  including liquid, non-liquid, and real property as well as income producing
				  goods, services and businesses. Trusts and portions of trusts may be treated as
				  available income, available resources, or as a transfer of assets for less than
				  fair market value.
C. For the
				  purposes of this Part, the term "Medicaid LTSS applicant" refers to both a
				  person seeking initial eligibility and current beneficiary so as to distinguish
				  between a trust beneficiary. When a trust includes the assets of multiple
				  persons, only the portion of trust that is attributable to the Medicaid LTSS
				  applicant is considered in the eligibility process.
D. The factors that affect the treatment of a
				  trust in the Medicaid LTSS financial eligibility process are as follows:
1. Legally valid - A trust must be valid
				  under Rhode Island law.
2. Date
				  established - Under Federal law, trusts established prior to August 11, 1993
				  are treated differently than those established after that date. In addition,
				  income and resources generated from trusts created before implementation of the
				  DRA in 2005 may be treated differently.
3. Types of trusts - Treatment of a trust
				  varies depending on whether it is:
a. Living
				  trust versus testamentary trust.
(1) A living
				  trust or an
inter-vivos
trust - Set up during a person's
				  lifetime and becomes effective when it is created. The State reviews Medicaid
				  living trusts to determine whether and to what extent the instrument affects a
				  person's LTSS financial eligibility.
(2) Testamentary trust - Generally
				  established within a will and does not become effective until after the death
				  of the "testator" who established the trust. A testamentary trust takes effect
				  after the testator's death. Testamentary trusts are not treated as trusts for
				  Medicaid eligibility purposes and therefore are exempt from the provisions in
				  this section.
b.
				  Revocable versus irrevocable under Rhode Island law.
(1) Revocable trusts - The grantor who
				  established the trust retains ownership and control of the property in the
				  trust and can change the terms, including the trustees and grantor
				  beneficiaries.
(2) Irrevocable
				  trusts - The grantor who created the trust gives ownership and control of the
				  property in the trust to one or more other persons known as "trustees." The
				  grantor is thus unable to enact changes in the trust.
4. Principal versus earnings and
				  interest - In general:
a. Principal. The trust
				  principal is the property placed in trust by the grantor that the trustee
				  holds, subject to the rights of the trust beneficiary, plus any trust earnings
				  paid into the trust and left to accumulate the month following the month of a
				  distribution.
b. Earnings or
				  interest. Trust earnings/interest are amounts of income derived from trust
				  principal, such as interest, dividends, royalties, or rents. These amounts are
				  unearned income to the trust beneficiary if he or she is legally able to use
				  them for personal support and maintenance.
5. Medicaid eligibility category - Available
				  income and resources from a trust are counted only once during the
				  determination of eligibility for Medicaid health coverage. Accordingly, the
				  State does not reconsider available income and/or resources from a trust that
				  was included in the determination of financial eligibility for SSI.