Medicaid Friendly Trust Administration

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Planning for long-term care in Georgia is one of the most important things you can do for yourself and your family. If you or a loved one may need nursing home care or home-based services in the future, a Medicaid-friendly trust can be a key part of your plan. At Slowik Estate Planning in Atlanta, Georgia, we help families understand how these trusts work and how to use them to protect assets while staying eligible for Medicaid benefits. This page will walk you through what Medicaid-friendly trust administration means, how Georgia law applies, and why acting sooner rather than later matters for your family.

Table of Contents

What Is a Medicaid-Friendly Trust?

A Medicaid-friendly trust is a legal arrangement designed to hold assets in a way that does not disqualify you from receiving Medicaid benefits. Not all trusts work this way. In fact, if a trust is set up incorrectly, Medicaid can count those assets against you and deny your application for coverage.

There are several types of trusts that can be structured to work with Medicaid rules. The most common ones used in Georgia include Special Needs Trusts (SNTs), Qualified Income Trusts (QITs, also called Miller Trusts), and irrevocable Medicaid Asset Protection Trusts. Each serves a different purpose depending on your situation, your income level, and your assets.

Qualified Income Trusts, also called Miller Trusts, allow Nursing Home Medicaid and Medicaid Waiver applicants with income over Medicaid’s limit to still become income-eligible. This is important because Georgia has an income cap for long-term care Medicaid. If your monthly income is above that cap, a QIT can help you qualify.

Monthly income put into an irrevocable QIT is not counted as income by Georgia Medicaid. The trustee named in the trust gets legal control of the money. Trust funds can only be used for very specific purposes, such as paying long-term care services and medical expenses accrued by the Medicaid enrollee.

Georgia’s trust law is governed by the Revised Georgia Trust Code of 2010, found under O.C.G.A. Title 53, Chapter 12. Article 5 of that code covers spendthrift and discretionary trusts, which are often key features of a properly structured Medicaid-friendly trust. Under O.C.G.A. § 53-12-80 through § 53-12-83, a spendthrift trust protects trust assets from the beneficiary’s creditors, which can support the trust’s integrity in the Medicaid context. Working with an Atlanta estate planning lawyer who understands both Georgia trust law and Medicaid rules is critical to getting this right.

How Georgia Medicaid Rules Apply to Trusts

Georgia Medicaid has strict rules about what counts as an asset when you apply for long-term care benefits. If you own too many countable assets, you will not qualify. This is where proper trust planning comes in.

Countable assets are calculated towards Medicaid’s asset limit. This includes cash, stocks, bonds, investments, bank accounts, and real estate in which one does not reside. There are also many assets that are non-countable. Exemptions include personal belongings, household furnishings, an automobile, irrevocable burial trusts up to $10,000 in Georgia, and generally one’s primary home.

Federal law under 42 U.S.C. § 1396p governs how trusts are treated for Medicaid eligibility purposes. For purposes of determining an individual’s eligibility for, or amount of, benefits under a state plan, specific rules apply to a trust established by such individual. In plain terms, this means Medicaid looks at who set up the trust, whose money funded it, and whether the person applying can access those funds.

Generally, a trust created by an applicant for means-tested public benefits is countable to the full extent the applicant could, under any circumstances, access income or principal or have income or principal used for his or her benefit. This is why the structure of the trust matters so much. If the trust is set up incorrectly, all of those assets could count against you.

Georgia uses a 60-month look-back rule for transfers in long-term care programs, with penalties for gifting. This means Medicaid reviews the past five years of your financial history. If you transferred assets to a trust or gave money away during that period, you could face a penalty period during which Medicaid will not pay for your care. Planning ahead, well before you need care, is the best way to avoid this problem. Contact Slowik Estate Planning to discuss your options before the clock starts running.

Special Needs Trusts and Protecting Disabled Beneficiaries

If you have a family member with a disability, a Special Needs Trust can protect their Medicaid eligibility while still providing financial support. This type of trust is authorized under federal law at 42 U.S.C. § 1396p(d)(4)(A), which creates an exception to the general rule that trust assets count against a Medicaid applicant.

Congress changed the federal law to say that a person could put assets in a trust set up for the person’s own benefit and still qualify for Medicaid, so long as the trust met certain requirements, most importantly that the trust paid back Medicaid when the person died. This change created section (d)(4)(A) of Section 1396p of Title 42 of the U.S. Code.

To qualify as a d4A trust, the assets must have been transferred to the trust when the beneficiary was disabled and under age 65, and the trust document must include a payback clause saying that when the beneficiary dies, any Medicaid benefits received while alive must be repaid to the states that provided those benefits.

Trust funds must be used exclusively for the beneficiary’s benefit without interfering with Medicaid eligibility. While Medicaid covers basic needs, trust funds supplement those benefits. Permissible expenses include specialized medical equipment, assistive technology, home modifications, and personal care attendants.

For families leaving assets to a loved one with a disability, a third-party Special Needs Trust is another option. The primary difference between a first-party special needs trust and a third-party special needs trust is that a first-party trust holds assets that originally belonged to the person with special needs, while a third-party trust holds assets that never belonged to the special needs beneficiary. Third-party trusts do not require a Medicaid payback provision, which means more of the trust assets can pass to other family members after the beneficiary’s death. Proper planning for trust beneficiaries with disabilities requires careful drafting to meet both federal and Georgia requirements.

Trust Administration Under Georgia Law and Changing Federal Rules

Setting up a Medicaid-friendly trust is only the first step. Administering it correctly over time is just as important. A trustee has ongoing duties under Georgia law, and failing to meet those duties can put the trust, and the beneficiary’s Medicaid eligibility, at risk.

Under O.C.G.A. Title 53, Chapter 12, Article 11 (§§ 53-12-200 through 53-12-221), trustees in Georgia have clear legal duties, including the duty of loyalty, the duty to invest prudently, and the duty to keep accurate records. Article 12 of the same chapter requires trustees to maintain proper accounting records. Article 13 governs the administration of the trust itself. These rules apply to Medicaid-friendly trusts just as they do to any other trust. Trust administration done properly protects both the trustee and the beneficiary.

Maintaining detailed financial records is critical, as Medicaid agencies periodically review trust activities. Some states require annual trust accountings. Georgia trustees should keep records of every distribution, every deposit, and every decision made on behalf of the trust.

Federal law is also changing in ways that affect Medicaid planning. The One Big Beautiful Bill Act (H.R. 1, 119th Congress) includes several provisions that will reshape Medicaid eligibility rules. Starting in late 2026, Medicaid beneficiaries must renew eligibility every six months, requiring regular documentation to avoid coverage gaps. Reduced retroactive coverage starting in January 2027 means Medicaid will cover only two months prior to application, down from the previous 90 days, which increases potential medical debt for late applicants. These changes make it more important than ever to have your trust and Medicaid plan in place well before you need care. Slowik Estate Planning monitors these developments and can help you adjust your plan as the law changes.

The One Big Beautiful Bill Act also proposes changes to home equity limits for long-term care Medicaid eligibility beginning in 2028, and requires states to conduct more frequent eligibility redeterminations. These shifts could affect how your trust is structured and how your assets are counted. Talking to an estate planning attorney now gives you time to plan ahead rather than react in a crisis.

Why Medicaid-Friendly Trust Administration Matters for Atlanta Families

Long-term care is expensive. Nursing home care in Georgia can cost thousands of dollars per month. Without a plan, a family can spend down a lifetime of savings in just a few years. A properly structured and administered Medicaid-friendly trust can protect those assets for your spouse, your children, or other loved ones.

Think about this: if you or your spouse needed nursing home care tomorrow, would your family be financially prepared? Most families are not. That is why Medicaid planning, including the use of the right type of trust, is such an important part of any complete estate plan.

There is a Community Spouse Resource Allowance that protects a larger amount of a couple’s countable assets for the non-applicant spouse of a Nursing Home Medicaid or Medicaid Waiver applicant. In 2026, the community spouse can retain up to $162,660 of the couple’s countable assets. A Medicaid-friendly trust can work alongside this allowance to provide even greater protection for the spouse who remains at home.

A complete estate plan may also include wills that coordinate with your trust, powers of attorney, and health care directives. For families with unique situations, such as assets in other countries, International Estate Planning may also be part of the picture. And for those with beloved animals, pet guardianships can be included in your broader plan to make sure every member of your family is cared for.

Slowik Estate Planning is located in Atlanta, Georgia, and serves families across the metro Atlanta area. We help clients create and administer Medicaid-friendly trusts that are built to hold up under scrutiny, comply with Georgia and federal law, and protect what matters most to your family. We encourage you to reach out to us to schedule a consultation. Every family’s situation is different, and we are here to help you find the right plan for yours. Prior results in any estate planning matter do not guarantee a similar outcome in your case, as results depend on the specific facts and circumstances involved.

FAQs About Medicaid-Friendly Trust Administration in Atlanta, Georgia

What is the difference between a Qualified Income Trust and a Special Needs Trust in Georgia?

A Qualified Income Trust, sometimes called a Miller Trust, is used when a person’s monthly income is too high to qualify for Medicaid long-term care benefits. It redirects that excess income into an irrevocable trust so it is not counted by Medicaid. A Special Needs Trust, on the other hand, is designed to hold assets for a person with a disability without disqualifying them from Medicaid or SSI benefits. The two serve very different purposes, and using the wrong one for your situation can cause serious problems with your Medicaid eligibility.

How does Georgia’s 60-month look-back period affect trust planning?

When you apply for long-term care Medicaid in Georgia, the state reviews your financial history for the past 60 months, which is five years. If you transferred assets to a trust or gave money away during that period without receiving fair value in return, Medicaid can impose a penalty period during which it will not pay for your care. This is why it is so important to start your Medicaid trust planning well before you need care. Acting early gives your plan time to work without triggering a penalty.

Can a trustee be held personally liable for mismanaging a Medicaid-friendly trust in Georgia?

Yes. Under O.C.G.A. Title 53, Chapter 12, Article 14, a trustee in Georgia can be held liable for a breach of trust. This includes making improper distributions, failing to keep accurate records, or not following the specific rules that apply to Medicaid-friendly trusts. If a trustee makes a distribution that causes the beneficiary to lose Medicaid eligibility, that could be considered a breach of fiduciary duty. Working with an attorney during trust administration helps protect the trustee and the beneficiary.

How will upcoming changes to federal Medicaid law affect my trust plan?

Several changes are coming that could affect your Medicaid plan. Under the One Big Beautiful Bill Act (H.R. 1, 119th Congress), Medicaid expansion population enrollees will be required to renew their eligibility every six months starting after December 31, 2026. Retroactive coverage will also be shortened beginning in 2027. Home equity limits for long-term care Medicaid are set to be capped beginning in 2028. These changes mean that plans put in place today may need to be reviewed and updated as the law takes effect. Slowik Estate Planning monitors these developments and can help you stay ahead of them.

Do I need an attorney to set up a Medicaid-friendly trust in Georgia, or can I use an online form?

Using a generic online form for a Medicaid-friendly trust is a serious risk. These trusts must comply with both Georgia state law under O.C.G.A. Title 53, Chapter 12, and federal Medicaid rules under 42 U.S.C. § 1396p. A mistake in the trust document, such as giving the beneficiary too much control over the funds or failing to include a required payback provision, can result in the trust assets being counted against you and your Medicaid application being denied. An experienced estate planning attorney can draft the trust correctly and help you administer it properly over time. Slowik Estate Planning in Atlanta, Georgia is available to help you get this right from the start.

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