How to Set Up a Miller Trust for Medicaid Eligibility

To set up a Miller Trust for Medicaid eligibility, you draft a short irrevocable trust document that meets three federal requirements, sign it before a notary, open a dedicated bank account in the trust’s name, route your qualifying income into that account every month, and submit the trust to your state Medicaid agency. The setup usually takes a few weeks. The document itself is not complicated, but small errors in drafting or in the monthly deposits can disqualify the applicant from Medicaid entirely.

When You Actually Need a Miller Trust

A Miller Trust, also called a Qualified Income Trust, solves one problem: your gross monthly income is too high for Medicaid’s long-term care program but too low to pay for a nursing home. Federal law authorizes these trusts under 42 U.S.C. § 1396p(d)(4)(B).¹

The Medicaid income cap for long-term care is 300% of the SSI federal benefit rate. For 2026, that puts the cap at $2,982 per month.² If your gross monthly income from Social Security, pensions, annuities, and any other regular sources exceeds $2,982, you need a Miller Trust to qualify in states that enforce the cap.

Gross income is what counts. Medicare Part B withholdings and tax withholdings do not reduce the figure. A Social Security statement showing $3,100 before the Medicare deduction puts you over the cap even though less lands in your account.

One boundary before you draft anything: roughly half the states are income-cap states where the trust is necessary. The rest use a “medically needy” or spend-down pathway that lets applicants apply excess income to medical bills each month. In a spend-down-only state, a Miller Trust accomplishes nothing. Confirm your state’s approach with the Medicaid office before you begin.

What the Trust Document Must Contain

Federal law imposes three requirements. Miss any one and the trust does not work for Medicaid purposes.¹

The trust can hold only income received by the beneficiary, such as Social Security, pension, and other regular payments, plus interest earned inside the trust. Savings, investment accounts, real estate proceeds, and other assets cannot go in.

The document must name the state Medicaid agency as the first-priority remainder beneficiary. When the trust holder dies, any funds left in the trust go to the state to reimburse Medicaid up to what it paid for the person’s care.

The trust must be irrevocable. Once established, it cannot be revoked or amended, which is what prevents someone from later pulling income back out.

States often add their own conditions on top of the federal three. Some publish a template you can complete without a lawyer. Others require specific language about disbursements or trustee reporting. Ask your state Medicaid office what it expects before you finalize the document.

The Setup Steps

Work through these in order:

Gather income documentation. Pull Social Security award letters, pension statements, annuity contracts, and records of any other regular income. Note the gross amount from each source, not the net deposit.
Draft the trust document. It names the grantor (the Medicaid applicant), the trustee (someone else who will manage the account), and the beneficiary (the applicant again). Include the three federal requirements plus any state-specific language. Where a state provides a fill-in-the-blank form, use it. Where it doesn’t, an attorney is worth considering. Drafting fees typically run from $400 to $2,000.
Sign before a notary. The grantor and the trustee both sign in the presence of a notary public.
Open a dedicated bank account. The trust needs its own account, separate from any personal account, titled in the trust’s name. Use the beneficiary’s Social Security number rather than a separate EIN, because the IRS treats a Miller Trust as a grantor trust. Some banks will ask for an EIN out of habit; a Miller Trust does not require one.
Submit the trust to your state Medicaid agency. Provide a copy of the signed document and proof of the new bank account. Some states want the trust filed with the Medicaid application; others review it separately.

Funding the Trust Each Month

Once the trust exists, it only works if you feed it correctly. States differ on one point: some require all of the beneficiary’s income to flow through the trust, others allow you to deposit only the income above the cap. Either way, if you deposit income from a particular source, the entire payment from that source must go in. A $2,400 Social Security check cannot be split, with only $600 going into the trust.

Deposits must happen every month without exception. Missing a month can cost Medicaid eligibility for that period, and some states will terminate benefits until the trust is back in compliance. Set up direct deposit from each income source into the trust account whenever the payer allows it. That eliminates the risk of forgetting and produces a clean paper trail if the Medicaid agency reviews the account.

What the Trustee Pays Out Each Month

Money does not accumulate in the trust. Each month the trustee disburses it in an order set by state Medicaid rules. The typical sequence:

A personal needs allowance for the nursing home resident, ranging from $30 to $200 per month depending on the state, for haircuts, phone service, clothing, and similar personal expenses.
A spousal income allowance, if the applicant has a spouse living in the community. In 2026 the minimum monthly maintenance needs allowance falls between $2,643.75 and $4,066.50, varying by state and by the community spouse’s own income.
Health insurance premiums, including Medicare and any supplemental coverage the beneficiary pays.
Patient liability to the nursing facility. Whatever remains goes to the facility as the resident’s share of cost, and Medicaid covers the difference between that share and the facility’s rate.

The trustee handles all of this, either by writing checks or by setting up recurring payments from the trust account.

Choosing a Trustee

The Medicaid applicant cannot serve as their own trustee. Beyond that, most states allow any competent adult. Adult children are the most common choice, followed by other family members and close friends. Some states allow co-trustees.

If no one in the applicant’s life can serve, a professional fiduciary can be hired and paid from the trust income. Some states also allow the public guardian’s office to serve for individuals under guardianship. The trustee needs no legal or financial credentials, but the role requires making the same set of payments every month and keeping records the Medicaid agency may request.

Mistakes That Void the Trust

A Miller Trust that fails to meet the requirements does not just underperform. It fails completely, and the income deposited into it still counts toward the Medicaid limit. The errors that cause the most trouble at setup:

Depositing assets rather than income. Savings, gift money, or property sale proceeds violate the income-only rule and can invalidate the trust.
Splitting a single income source. If Social Security goes into the trust, the entire Social Security payment must go in.
Missing monthly deposits. A skipped or late deposit can create a gap in Medicaid eligibility, and the nursing facility may bill the resident directly for the uncovered period.
Omitting the state as remainder beneficiary. A trust that leaves out the payback provision, or names family members ahead of the state, will be rejected.¹
Using trust funds for unauthorized purposes. Payments outside the approved disbursement categories, such as gifts or non-medical purchases, violate the trust terms and can cost the beneficiary Medicaid coverage.

Records and What Happens at Death

The trustee should keep a ledger of every deposit and every disbursement, along with bank statements and copies of checks. Most states require periodic accountings, and weak records are one of the fastest routes to a compliance review.

The trust ends when the beneficiary dies. Any balance in the account goes to the state to reimburse Medicaid, capped at the amount Medicaid actually paid for the person’s care.¹ Balances at death tend to be small, because the trust disburses nearly all its income each month. The payback obligation applies only to funds inside the trust; it does not expand the state’s ability to pursue other assets beyond what Medicaid estate recovery law already allows.

1
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
2
Social Security Administration. How Much You Could Get From SSI