Running a Qualified Income Trust: What Happens at the Bank, and Every Month After

Vernon's Situation, and Why the Trust Alone Isn't the Finish Line

Vernon is 85 and lives in Titusville. Between his Social Security and a county pension, his monthly income clears Florida's income limit for nursing home Medicaid, the threshold that exists specifically to catch people in Vernon's position: too much income to qualify outright, nowhere near enough to privately pay for long-term care. (Vernon is a composite example built from the kinds of situations I see in practice, not an actual client.) His daughter Renee has already been through the eligibility and income-cap basics with our office, and the trust itself has been drafted and signed. What Renee didn't expect was how much the next sixty days would depend on logistics at a bank branch and a monthly routine she'd now be responsible for, not just the legal document itself.

A Qualified Income Trust, sometimes called a Miller Trust, is an irrevocable, income-only trust. It doesn't hold Vernon's house or his savings. Its only job is to receive income that would otherwise push him over Florida's cap, so that income is treated as unavailable to him for Medicaid purposes. But Florida's Medicaid program, administered through the Department of Children and Families and its ACCESS system, looks at whether the trust actually operated correctly each month, not just whether it exists on paper.

Signing the Trust and Opening the Account: What the Bank Will Ask

Once the trust is signed and notarized, Renee's first real task was opening a dedicated bank account titled in the name of the trust, separate from Vernon's personal accounts and separate from her own. This account exists for one purpose: to receive the income that must flow through the trust and to pay it back out for Vernon's care and allowed expenses.

Renee is named as trustee. Vernon cannot serve as trustee of his own QIT, which is one reason it's common for an adult child, especially one who already holds durable power of attorney, to take on the role. Having both the personal account access and the trust account access in one person's hands tends to make the monthly mechanics much smoother.

When Renee walked into her father's bank, the teller had never heard the term Miller trust and wasn't sure how to set up the account. That's a common moment, not a red flag. What helped was bringing the full trust document and explaining plainly: this is an irrevocable income-only trust required for Florida Medicaid long-term care eligibility, and it needs its own checking account in the trust's name with the trustee as the authorized signer. Larger banks and credit unions with trust or wealth departments tend to recognize the structure faster, but any bank can open the account once staff understands what's being asked.

The First Deposit, and Why Timing Is Everything

Here is the piece that catches families off guard: the trust has to be drafted, funded, and actually operating before the month eligibility is supposed to begin. DCF reviews the trust month by month. A trust that exists as a signed document but shows no deposits or disbursements in the relevant month simply won't satisfy the requirement for that month.

For Vernon, that meant his Social Security and pension income needed to be deposited into the trust account in the same calendar month he received them, not the month before and not the month after. Florida's guidance is specific on this point: income has to go into the trust in the month it's received. There's no retroactive fix and no advance deposit. The trust also doesn't require the full deposit to happen exactly on the first of the month. As long as the portion of income that exceeds the income limit is deposited into the account sometime during that same month, the requirement is satisfied for that month.

Renee's practical solution was to set up automatic or near-automatic transfers the moment Vernon's income posted to his personal account each month, moving it straight into the trust account within days. That small habit, repeated monthly, is what keeps the trust "operating" in the way DCF expects to see it.

The Monthly Routine: Deposits, Paying the Facility, and Keeping the Account at Zero

Once the account was open and the first deposit timed correctly, the month-to-month routine became fairly mechanical for Renee:

• Deposit: Vernon's Social Security and pension income (or at least the excess over the income cap, depending on how the trust is drafted) goes into the trust account in the month received.
• Disburse for patient responsibility and allowed deductions: Funds flow back out of the trust to cover Vernon's monthly patient responsibility toward the facility, along with any permitted deductions such as a personal needs allowance or health insurance premiums, following the order the trust document specifies.
• Pay the facility directly: The portion owed to the nursing facility as patient responsibility should be paid from the trust account to the facility, not routed back through Vernon's personal account.
• Zero out, to the extent possible: Trust balances that accumulate month over month are treated as a countable resource, which can jeopardize eligibility. The goal each month is to empty the account down to zero (or very close to it) once the required deposits and disbursements are made.

Renee also keeps records: bank statements showing each deposit date and amount, copies of facility invoices, and proof of each disbursement. If DCF or the Office of Appeal Hearings ever questions whether a given month's trust activity was correct, those records are what support the answer.

The State as Remainder Beneficiary, and What Happens When Income Changes

Vernon is the sole beneficiary of the trust during his lifetime, but the trust document names the State of Florida as the remainder beneficiary. That means that when Vernon dies, any funds left in the trust account must be paid to the state, up to the amount Medicaid spent on his care, before anything passes to Renee or other family. This is a required feature of every Qualified Income Trust, not a choice made by the family, and it's one reason the account should generally run close to zero each month rather than build up a balance.

Vernon's income is fixed between Social Security and his pension, so Renee doesn't expect much change. But if income does change, a cost-of-living adjustment to Social Security, a new income source, or a change in the facility's charges, the trust's deposit amount needs to be reviewed and adjusted. DCF treats a change in income as something the household is responsible for reporting, since it can affect the month's eligibility math.

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.