1. A trust is an arrangement whereby a person known as the "grantor" or "trustor" gives assets to another person known as the "trustee" with instructions to use the assets for the benefit of a third person known as the "beneficiary". The assets placed in trust are called the "principal" or "corpus". The positions of grantor, trustee, and beneficiary occur in all trusts, but it is not uncommon for a single trust to involve more than one grantor, trustee, or beneficiary. It is also not uncommon for a grantor to establish a trust where the grantor is also a beneficiary or where the trustee is also a beneficiary. "Trusts" includes escrow accounts, investment accounts, conservatorship accounts, and any other legal instruments, devices, or arrangements, whether or not written, managed by an individual or entity with fiduciary obligations. A trust may have an effect on eligibility whether the applicant is a grantor, trustee, or beneficiary.

1. 2. Review of a trust as a part of an eligibility determination includes efforts to ascertain the intent of the grantor. The grantor has no authority or power to determine eligibility or to require a particular outcome in an eligibility determination, and a grantor's efforts to do so may be disregarded.

2. 3. Trusts may be categorized in many ways, but the revocability of a trust is a fundamental characteristic. A revocable trust is a trust that the grantor, or someone acting at the request, direction, or influence of the grantor, has the power to revoke, remove from, or otherwise end the trust. An irrevocable trust is a trust that may not be revoked in any way by the grantor or anyone acting at the request, direction, or influence of the grantor. The determination of trust revocability is not based solely on trust terms stating the trust is irrevocable. A trust is treated as revocable, regardless of its terms, if:

1. a. The trust reserves a power to amend to the grantor, or grants a power to amend to some other person, unless the power to amend is limited to authority to terminate the trust for impossibility of administration, and the trust also provides for distribution of the trust assets to the primary beneficiary, free of trust;

2. b. The grantor and the beneficiaries consent to the revocation;

3. c. The grantor is also the sole beneficiary of the trust;

4. d. The grantor of a trust and all trust beneficiaries are part of a Medicaid unit;

5. e. The grantor is a parent, and beneficiaries of the trust include only the grantor, the grantor's spouse, or the grantor's minor children;

6. f. The trust has been amended subsequent to its establishment, unless the trust was amended under North Dakota Century Code section 59-12-11;

7. g. The trust provides for termination and disbursement to the grantor upon conditions relating to the grantor during the grantor's lifetime; or

8. h. The trust provides for revocation or amendment only upon order of a court.

3. 4. In the case of a revocable trust:

1. a. The corpus of the trust shall be considered assets available to the grantor;

2. b. Payments from the trust to or for the benefit of grantor, the grantor's spouse, or the grantor's dependent child shall be considered income of the grantor;

3. c. Any other payments from the trust shall be considered income or assets disposed of by the grantor for purposes of section 75-02-02.1-33.1 or 75-02-02.1-33.2.

4. 5. Once distributed or paid, a distribution or payment from a trust is not a trust asset, but is an asset of, or income to, the distributee or payee.

5. 6. a. For purposes of this subsection:

1. (1) 'Medicaid-qualifying trust' means a trust established, other than by will, by an individual or the individual's spouse, under which the individual may be the beneficiary of all or part of the payments from the trust, and the distribution of such payments is determined by one or more trustees who are permitted to exercise any discretion with respect to the distribution to the individual.

2. (2) 'A trust established by an individual or the individual's spouse' includes trusts created or approved by courts or by the individual or the individual's spouse where

the property placed in trust is intended to satisfy or settle a claim made by or on behalf of the individual or the individual's spouse against any third party.

1. b. The amount from an irrevocable Medicaid-qualifying trust deemed available to the grantor or the grantor's spouse is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor. For purposes of this subdivision, 'grantor' means the individual referred to in paragraph 1 of subdivision a.
2. c. This subsection applies:
3. (1) Even though the Medicaid-qualifying trust is irrevocable or is established for purposes other than to enable a grantor to qualify for Medicaid; and
4. (2) Whether or not the discretion described in paragraph 1 of subdivision a is actually exercised.
5. 1. a. For purposes of this subsection, 'support trust' means a trust which has, as a purpose, the provision of support or care to a beneficiary. The purpose of a support trust is indicated by language such as 'to provide for the care, support, and maintenance of . . .'; 'to provide as necessary for the support of . . .'; or 'as my trustee may deem necessary for the support, maintenance, medical expenses, care, comfort, and general welfare'. No particular language is necessary, but words such as 'care', 'maintenance', 'medical needs', or 'support' are usually present. The term includes trusts which may also be called 'discretionary support trusts', so long as support is a trust purpose and the trustee's discretion is not unfettered. This subsection applies without regard to:
6. (1) Whether or not the support trust is irrevocable or is established for purposes other than to enable a beneficiary to qualify for Medicaid or any other benefit program where availability of benefits requires the establishment of financial need; or
7. (2) Whether or not the discretion is actually exercised.
8. b. Except as provided in subdivisions c and d, the amount from a support trust deemed available to the beneficiary, the beneficiary's spouse, and the beneficiary's children is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the beneficiary, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the beneficiary.
9. c. A beneficiary of a support trust, under which the distribution of payments to the beneficiary is determined by one or more trustees who are permitted to exercise any discretion with respect to that distribution, may show that the amounts deemed available under subdivision b are not actually available by:
10. (1) Commencing proceedings against the trustee or trustees in a court of competent jurisdiction;
11. (2) Diligently and in good faith asserted in the proceeding that the trustee or trustees is required to provide support out of the trust; and
12. (3) Showing that the court has made a determination, not reasonably subject to appeal, that the trustee must pay some amount less than the amount determined under subdivision b.
13. d. If the beneficiary makes the showing described in subdivision c, the amount deemed available from the trust is the amount determined by the court.

e. Any action by a beneficiary or the beneficiary's representative, or by the trustee or the trustee's representative, in attempting a showing under subdivision c, to make the department, the state of North Dakota, or a county agency a party to the proceeding, or to show to the court that Medicaid benefits may be available if the court limits the amounts deemed available under the trust, precludes the showing of good faith required under subdivision c.

8. a. For purposes of this subsection, "other trust" means any trust for which treatment is not otherwise described in this section or section 75-02-02.1-31.1.

b. The amount from an "other trust" deemed available to a beneficiary of that trust is the greater of the amount which must be distributed to that beneficiary under the terms of the trust, whether or not that amount is actually distributed, and the amount which is actually distributed.

9. An applicant or recipient who is a trustee has the legal ownership of trust property and the legal powers to distribute income or trust assets which are described in the trust. However, those powers may be exercised only on behalf of trust beneficiaries. If the trustee or other members of the Medicaid unit are not also beneficiaries or grantors to whom trust income or assets are treated as available, trust assets are not available to the trustee.

10. Trusts may provide that trust benefits are intended only for a beneficiary's "special needs", and require the trustee to take into consideration the availability of public benefits and resources, including Medicaid. Some trusts may provide that the trust is not to be used to supplant or replace public benefits, including Medicaid benefits. Some trusts may contain terms which attempt to declare or make the determination of the availability of trusts assets for Medicaid purposes. If a trust contains such terms, the amount available to the Medicaid applicant or recipient is the amount provided in this section, assuming, for the purposes of making that determination, that the applicant or recipient is ineligible for Medicaid.

11. A trust is established, with respect to any asset that is a part of the trust corpus, on the date that asset is made subject to the trust by an effective transfer to the trustee.

12. This section applies to any trust to which section 75-02-02.1-31.1 does not apply. Subsections 1, 2, and 3 apply to trusts described in section 75-02-02.1-31.1.

History: Effective December 1, 1991; amended effective December 1, 1991; October 1, 1993; July 1, 2003; April 1, 2008; April 1, 2010; April 1, 2018.

Law Implemented: NDCC 50-24.1-02; 42 USC 1396a(k)