As you age and need more coverage for health care costs, you may find that you cannot qualify for Medicaid benefits because you make too much income. Delaware is one of a number of states that imposes a hard income cap on its residents. Some seniors turn to a Miller Trust for a solution.
To reduce your income below the cap, you need to channel your excess income so that it does not count against you. Delaware.gov explains how a Miller Trust fulfills this goal.
Miller Trusts and your income
A Miller Trust is a specific kind of trust that diverts your income. The trustee in charge of your trust uses the trust income to pay for the cost of your care. A Miller Trust may also help your spouse by paying him or her a minimum monthly maintenance needs allowance if your spouse qualifies. After your death, the Miller Trust will pay into the state Medicaid program to cover your previous care costs.
Qualifications for a Miller Trust
The government could disqualify a Miller Trust if the creator did not set it up correctly. Many trusts are revocable, meaning their creators can change or abolish them if they wish. However, the government will not consider your revocable trust as a Miller Trust because you still have full control over the assets.
A valid Miller Trust must be irrevocable, meaning that once you set it up, you cannot change the trust or end it. Because the government does not count income as yours, the money in the trust does not count towards the state income cap.