Current through Register Vol. 46, No. 39, September 25, 2024
(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.
