What happens to funds in a "Miller" or "Income Cap" trust after the death of the patient?

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Arizona, like a lot of other states (but not all of them), requires long-term care Medicaid patients with too much income to establish a special type of trust to qualify for assistance with their care costs. These trusts are usually called "Miller" trusts, and must follow some very specific rules. One of those rules is that upon the death of the patient all money left in the trust must be turned over to the State to be paid toward the Medicaid costs advanced during the patient's life. This is usually not a very large problem, since almost all of the money flowing into the Miller trust during life must immediately be paid back out to the institution where the patient lives--leaving very little in the trust from month to month. Miller trust accounts can, however, build up; when they do, we recommend that the trustee spend excess accumulations on items that will benefit the patient. While the trust can not pay for burial expenses after the patient's death, it is permissible to prepay ... more
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