A Medicaid qualifying trust (MQT) is a trust or similar legal device (see NOTE) set up other than by a will, using the client's and/or spouse's money or property, and meets all of the following criteria:
- The trust is set up by the client (or the client's spouse, legal guardian, or legal representative); and
- The client is the beneficiary of all or part of the trust payments; and
- The amount of potential payments from the trust is determined by one or more trustees who have discretion over how much can be distributed to the client; and
- The trustee is distributing less than the full amount allowed under the terms of the trust.
NOTE: The term "similar legal device" refers to any legal arrangement, instrument, or device used to shelter resources that meets all the criteria of a MQT, but is not called a trust. Examples of similar legal devices include but are not limited to:
- escrow accounts (a bank account generally held for a person by their agent that is returnable to the person or payable to a third party for specific reasons);
- savings accounts;
- pension funds;
- investment accounts; and
- other accounts managed by agents, custodians, or other persons with fiduciary obligations. A person with "fiduciary" obligations has the legal responsibility to manage the account for the benefit of the client.
The following trusts are Medicaid qualifying trusts if they meet MQT criteria:
- irrevocable trusts;
- education trusts; and
- medical trusts.
The creation of a Medicaid qualifying trust is a transfer of resources that is subject to transfer policy (see PM 07-02-20).
Self-sufficiency trusts and trusts set up with money and/or property other than that of the client or spouse, such as from an inheritance, are not Medicaid qualifying trusts.
When a trust is revoked, or the total principal is actually distributed to the client, it is no longer an MQT. The proceeds from the trust are considered a lump sum payment.
When the client is not legally competent (such as a child) and a trust is set up by a guardian (including a parent) using the client's assets, the trust is treated as if it had been set up by the client.
To determine if a trust or similar legal device is a Medicaid qualifying trust, request specific case guidance from Long Term Care - Asset Discovery Investigation (LTC-ADI). If the trust is an MQT the response will provide the amount of the trust to use as a resource and the amount to budget monthly as income.
This policy does not apply to any trust or initial trust decree established before April 7, 1986, solely for the benefit of a mentally retarded person residing in an ICF/MR facility.