Treatment of Other Trusts

Examples of Other Trusts include, but are not limited to:

Trusts or Similar Legal Devices (SLD) established by will.
Certain Individual and Pooled Trusts established for disabled individuals on or after 8/11/93.
Blocked accounts established prior to 8/11/93, which cannot be distributed until a minor reaches age 18.
Trusts established prior to 4/7/86, solely for the benefit of a developmentally disabled person residing in an intermediate care facility for the developmentally disabled.
Trusts established by a grandparent with the grandparent’s own property for a grandchild’s college education, ect.
Trusts established by the community for the medical and social service needs of an individual.
Trust accounts opened under the California Uniform Transfers to Minor Acts (CUTMA or UTMA) for a child with an adult who is named as custodian.
An OBRA ‘93 Trust when Undue Hardship has been found to exist.

Once a trust has been categorized as an Other Trust, review the terms of the trust to determine if it is revocable or irrevocable.

Revocable Other Trusts

When the MC individual has the legal right, power and authority to revoke the trust and the right to use the funds, the entire amount of funds held in a revocable trust is considered available.
- Trust principal is available property.
- Trust interest is income. If the trust income is not distributed in the month of receipt, the trust income is considered income in the month received and treated as available property in the month following.
When the MC individual does not have the legal right, power and authority to revoke the trust and use the trust proceeds, the trust assets (income and principal) are considered unavailable until actually distributed.
- Funds actually distributed from trust income are considered income.
- Funds actually distributed from trust principal are considered property.

Irrevocable Other Trusts

The funds in an irrevocable trust are considered available only if they are actually distributed.

Funds actually distributed from trust income are considered income.
Funds actually distributed from trust principal are considered property.

Note: Effective January 1, 2024, the principal of a revocable or irrevocable trust is disregarded because resources are no longer a factor when determining Non-MAGI MC eligibility.

Trusts Established on or after 8/11/93 for Disabled Individuals

Two types of trusts established on or after 8/11/93 specifically for disabled individuals, have been excepted from treatment under the OBRA ‘93 provisions. The two types, Individual Trusts and Pooled Trusts, are established with the assets or property rights of disabled individuals and are treated as Other Trusts.

Individual and Pooled Trust Characteristic Table

All of the characteristics as indicated below must be met in order for a trust to be exempt from treatment under the OBRA ‘93 provisions and treated as an Other Trust instead.

Individual Trust	Pooled Trust	Condition
X	X	Established on or after 8/11/93.
X		Established for the benefit of the disabled individual or disabled spouse by the parent, grandparent, legal guardian or by a court.
	X	Established and managed by a non-profit association.
	X	Maintains a separate account established solely for the benefit of each beneficiary of the trust, but for purposes of investment and management of funds, the trust pools these accounts.
X		Established for and contains the assets of an individual or spouse who was both disabled and under age 65 when the trust was established, and who is currently disabled whether or not he/she is 65 or over.
	X	Established for and contains the assets of an individual or spouse who was disabled when the trust was established and who is currently disabled.
X	X	Any addition or change to the trust after the disabled individual or disabled spouse reaches age 65 may be considered a disqualifying transfer of assets. NOTE: A transfer must not be disqualifying if made by a parent to a disabled son/daughter’s trust - regardless of the child’s age.
X		Provides that the Department of Health Services receive all remaining amounts in the trust upon the death of the disabled individual or disabled spouse or upon termination of the trust up to an amount equal to the total medical assistance paid on behalf of that individual by MC.
	X	Provides that the Department of Health Services, upon death of the disabled individual, receive all remaining amounts in the individual’s account, equal to the amount of medical assistance paid on behalf of the individual to the extent that amounts remaining in the individual’s account are not retained by the trust to cover the costs of the individual’s remaining management and investment fees.

Recovery of Costs

To ensure that recovery of costs of medical care occurs, EWs must notify the DHCS Third Party Liability (TPL) Branch when:

An Individual or Pooled Trust is discovered, or
The EW finds out that the disabled individual or disabled spouse has died, or
The trust is being terminated.

Send the individual's name, Social Security Number, Client Identification Number (CIN), and photocopies of the trust document to DHCS - Third Party Liability Branch. “Third-Party Liability,” page 3-15

Note: It is the responsibility of the trustee to contact DHCS to obtain the dollar amount of medical assistance provided by DHCS and then submit that amount, or the amount remaining in the trust, whichever is less, to the DHCS Recovery Branch.
Any trust which contains provisions allowing reimbursement of medical assistance provided only upon submission of a claim or a proper claim must not be considered an Other Trust and must be treated as an OBRA‘93 trust.

California Uniform Gift to Minors Act (CUTMA)/Uniform Gift to Minors Act (UTMA) Trusts

A CUTMA/UTMA Trust is established with an irrevocable monetary gift to a child. The custodian, who manages the account for the child, does not hold legal title to the property and has no ownership interest. Custodial powers may be restricted in which case funds may not be spent before the time of distribution except by court order upon showing that expenditure is necessary for the support, maintenance, or education of the minor. If there is no indication that custodial powers are restricted, funds may be used for the child’s benefit without a court order.

The principal used to fund a CUTMA/UTMA Trust is money gifted to a child by another person. A CUTMA/UTMA Trust is not one that is set up with the child’s own property even if it is placed in a custodial account.

ExampleExampleA child is awarded a personal injury settlement. The money is placed in a custodial account. This is NOT a CUTMA/UTMA Account.

Treatment of a CUTMA/UTMA Trust

Follow the chart below to determine how to treat a CUTMA/UTMA Trust:

IF the child:	AND the Account:	THEN The Value of the Account is:
Is included in the MFBU,	Does not restrict custodial powers	Considered available propertyConsidered available propertyApply Sneede regulations whenever the MFBU includes a child with his/her own nonexempt property..
Is included in the MFBU,	Restricts custodial powers	Considered unavailable property until actual distribution. Funds distributed from the trust income are considered income. Funds distributed from the trust principal are considered available property.
Is NOT included in the MFBU,	Restricts custodial powers	Not included in the property reserve because the child is not included in the MFBU.
Is NOT included in the MFBU,	Does not restrict custodial powers