75-02-02.1-31.1 - Trusts established by applicants, recipients, or their spouses after August 10, 1993

75-02-02.1-31.1. Trusts established by applicants, recipients, or their spouses after August 10, 1993

1. For purposes of determining an individual's eligibility under this chapter, subject to subsection 4, this section applies to a trust established by the individual after August 10, 1993. Subsections 1, 2, and 3 of section 75-02-02.1-31 apply to this section.

2.

a. For purposes of this subsection, an individual shall be considered to have established a trust if assets of the individual were used, by someone with lawful authority over those assets, to form all or part of the corpus of the trust and if any of the following individuals established that trust other than by will:

(1) The individual;

(2) The individual's spouse;

(3) A person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individual's spouse; or

(4) A person, including any court or administrative body, acting at the direction or upon the request of the individual or the individual's spouse.

b. In the case of a trust the corpus of which includes assets of an individual, as determined under subdivision a, and assets of any other person or persons, the provisions of this subsection shall apply to the portion of the trust attributable to the assets of the individual.

c. Subject to subsection 4, this section shall apply without regard to:

(1) The purposes for which a trust is established;

(2) Whether the trustees have or exercise any discretion under the trust;

(3) Any restrictions on when or whether distributions may be made from the trust; or

(4) Any restrictions on the use of distributions from the trust.

3.

a. In the case of a revocable trust:

(1) The corpus of the trust shall be considered assets available to the individual;

(2) Payments from the trust to or for the benefit of the individual shall be considered income of the individual; and

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

b. In the case of an irrevocable trust:

(1) If there are any circumstances under which payment from the trust could be made to or for the benefit of the individual, the portion of the corpus from which, or the income on the corpus from which, payment to the individual could be made shall be considered available to the individual, and payments from that portion of the corpus or income:

(a) To or for the benefit of the individual, shall be considered income of the individual; and

(b) For any other purpose, shall be considered a transfer of income or assets by the individual subject to section 75-02-02.1-33.1; and

(2) Any portion of the trust from which, or any income on the corpus from which, no payment could under any circumstances be made to the individual shall be considered, as of the date of establishment of the trust, or, if later, the date on which payment to the individual was foreclosed, to be income or assets disposed by the individual for purposes of section 75-02-02.1-33.1 or 75-02-02.1-33.2, and the value of the trust shall be determined for purposes of section 75-02-02.1-33.1 or 75-02-02.1-33.2 by including the amount of any payments made from such portion of the trust after such date.

4. This section shall not apply to:

a. A trust containing the assets of an individual under age sixty-five who is disabled and which is established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court, to the extent the person establishing the trust has lawful authority over the individual's assets, and if, under the terms of the trust, the department will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total Medicaid benefits paid under North Dakota Century Code chapter 50-24.1 on behalf of the individual; or

b. A trust containing the assets of a disabled individual that meets the following conditions:

(1) The trust is established and managed by a qualified nonprofit association that acts as trustee;

(2) A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts;

(3) Accounts in the trust are established solely for the benefit of a disabled individual by the parent, grandparent, or legal guardian of the individual, by the individual, or by a court; and

(4) To the extent that amounts remaining in the beneficiary's account upon the death of the beneficiary are not retained by the trust, the trust pays to the department from such remaining amounts in the account an amount equal to the total amount of Medicaid benefits paid under North Dakota Century Code chapter 50-24.1 on behalf of the beneficiary.

5. The department may waive application of this section as creating an undue hardship if the individual establishes that some other person, not currently receiving Medicaid, supplemental nutrition assistance program benefits, temporary assistance for needy families benefits, or low-income home energy assistance program benefits, would become eligible for such benefits because of and upon application of this section, and that the cost of those benefits, provided to that other person, exceeds the cost of Medicaid benefits available to the individual if application is waived.

6. For purposes of this section "income" and "assets" include all income and assets of the individual and of the individual's spouse, including any income or assets that the individual or the individual's spouse is entitled to, but does not receive because of action:

a. By the individual or the individual's spouse;

b. By a person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individual's spouse; or

c. By any person, including any court or administrative body, acting at the direction or upon the request of the individual or the individual's spouse.

7. 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.

8. A nonprofit association is qualified to establish and manage a trust described in subdivision b of subsection 4 only if the nonprofit corporation:

a. Is organized and operated exclusively for other than profit-making purposes and distributes no part of the corporation's income to its members;

b. Is qualified to receive charitable donations for which a taxpayer may lawfully claim a deduction under the provisions of section 501(c)(3) of the Internal Revenue Code [26 U.S.C. 501(c)(3)];

c. Has a governing board that includes no more than twenty percent membership related to any one disabled individual with an account maintained in the trust:

(1) As a parent, child, stepparent, stepchild, grandparent, grandchild, brother, sister, stepbrother, stepsister, great-grandparent, great-grandchild, aunt, uncle, niece, nephew, great-great-grandparent, great-great-grandchild, great-aunt, great-uncle, first cousin, grandniece, or grandnephew, whether by birth or adoption, and whether by whole or half-blood, of the disabled individual or the disabled individual's current or former spouse; or

(2) As agent or fiduciary of any kind except with respect to the trust established and managed by the nonprofit association.

d. Has no employee or agent whose compensation is in any way related to or conditioned upon the amount or nature of funds retained by the trust from the account of any deceased beneficiary;

e. Complies with the provisions of North Dakota Century Code section 10-33-12, whether or not incorporated or doing business in North Dakota; and

f. Retains funds from a deceased beneficiary's account only if:

(1) The retained funds are to compensate the trust for services rendered;

(2) The account is that of a beneficiary who was a disabled individual who did not receive benefits under this chapter; or

(3) The account does not contain the assets of a disabled individual.

(Amended by Administrative Rules Supplement 368, April 2018, effective April 1, 2018.)

General Authority: NDCC 50-06-16, 50-24.1-04

Law Implemented: NDCC 50-24.1-02; 42 USC 1396p(d)

The following state regulations pages link to this page.