Qualified Income Trust Mistakes That Cause Denial

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If your loved one needs nursing home care in Georgia, a Qualified Income Trust (QIT) can be the key to unlocking Medicaid benefits. But a single mistake in the setup or management of a QIT can result in a denial, a loss of benefits, or even a demand to repay the state. At Slowik Estate Planning in Atlanta, Georgia, we work with families every day who are facing these exact challenges. Understanding what causes a QIT to fail is the first step toward protecting your family. Here is what you need to know.

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What Is a Qualified Income Trust and Why Does Georgia Require It?

Georgia is what is known as an “income cap” state for Medicaid purposes. That means if a Medicaid applicant’s monthly income exceeds a set limit, they are automatically disqualified from receiving benefits, no matter how much they need care. As of 2026, the income limit for Nursing Home Medicaid and HCBS Waivers in most income cap states is $2,982 per month for an individual. If your loved one receives Social Security, a pension, and other retirement income that pushes them over this threshold, a QIT is the tool that makes Medicaid eligibility possible.

Also called Miller Trusts, Qualified Income Trusts allow Nursing Home Medicaid and Medicaid Waiver applicants with income over Medicaid’s limit to still become income-eligible. The way it works is straightforward. A portion, or all, of a person’s income can be directly deposited into a Miller Trust, no longer counting toward Medicaid’s income limit, allowing the Medicaid applicant to qualify. The trust account is set up at a bank, and a trustee manages the funds each month according to strict rules set by Georgia’s Department of Community Health (DCH).

What many families do not realize is that the QIT must be established and managed with precision. Effective September 1, 2004, Qualified Income Trusts became a viable means in Georgia by which a long-term care applicant may remove income from the Medicaid eligibility determination process, allowing applicants whose income equals or exceeds the Medicaid cap to receive Medicaid benefits by sheltering all or a portion of their income from the eligibility income limit test. That sounds simple, but the rules that govern how the trust is created, funded, and administered are detailed and unforgiving. Making an error at any stage can trigger a denial or termination of benefits. This is why working with an experienced Atlanta estate planning lawyer matters so much when setting up a QIT for a loved one.

Mistake #1: Making the Trust Revocable Instead of Irrevocable

One of the most common and costly mistakes families make is setting up a QIT that can be changed or canceled. Georgia law is very clear on this point. The trust must be irrevocable. A revocable QIT does not meet the criteria of a QIT and will be treated as a resource, subject to other rules pertaining to OBRA ’93 trusts. When the state treats the trust as a resource, the funds inside it count against the applicant’s asset limit, which is only $2,000 for an individual in 2026. That almost certainly means a denial.

Why does this happen? Families often want the flexibility to change the trust if circumstances shift. That is a natural instinct. But the whole point of a QIT is that it is a one-way door. Money goes in, it is used for approved purposes, and whatever is left when the Medicaid recipient passes goes to the state. Upon the Medicaid recipient’s death, the state is named as the beneficiary of the Miller Trust, and if there are any funds remaining in the trust account, the state will receive them as reimbursement for funds paid for the care of the Medicaid recipient. This is the trade-off Georgia families must accept in exchange for Medicaid coverage.

The trust document itself must also be drafted correctly to reflect this irrevocable nature. Boilerplate language pulled from the internet or a form that was not designed specifically for Georgia Medicaid purposes can easily fail this test. The trust must be established for the benefit of the applicant and must be composed only of income of the applicant, such as pension, RSDI, VA, accumulated interest, and similar income sources. Any language in the document that suggests the grantor retains control over the principal or can revoke the trust will cause the DCH caseworker to reject it. Getting the trust document right from the start is essential. Slowik Estate Planning, located in Atlanta, Georgia, prepares QIT documents that are designed to meet Georgia’s requirements.

Mistake #2: Including Assets or Commingling Funds in the QIT Account

The QIT is an income-only trust. That distinction is critical. The trust must contain no resources. In practical terms, this means you cannot deposit savings, proceeds from the sale of property, an inheritance, or any other asset into the QIT bank account. The account is strictly for income, meaning the monthly checks and payments that flow in from sources like Social Security, pensions, and veterans’ benefits.

A related problem is commingling funds. The QIT account should ideally be a banking account specifically for the purpose of the QIT with no commingled funds. If the trustee accidentally deposits non-income money into the account, or if the account is used for any purpose other than QIT administration, the account could be disqualified. DCH caseworkers look for exactly this kind of problem during eligibility reviews.

There is also a specific rule about how income gets into the account. The income cannot be placed into the QIT by direct deposit from the source of income, such as Social Security. However, the current month’s income may be transferred from another bank account to the QIT account. This surprises many families. You cannot simply redirect your loved one’s Social Security check straight into the QIT. You must first receive the income in a regular account and then manually transfer the appropriate amount into the QIT each month. Missing this step or doing it incorrectly is a common source of problems. A properly structured estate plan, including thoughtful wills and trust documents, can help your family avoid these technical traps before they become costly mistakes.

Mistake #3: Backdating the QIT or Waiting Too Long to Establish It

Timing is everything with a Qualified Income Trust. Families often wait until a crisis hits before they think about Medicaid planning. By then, they may be scrambling to set up a QIT under pressure. The problem is that Georgia does not allow the QIT to be backdated under any circumstances. The QIT may not be backdated. It is effective beginning the month in which it is completed and signed by all required parties, not before. This rule has real financial consequences. If your loved one needed Medicaid coverage starting in January but the QIT was not signed until February, January’s benefits cannot be recovered. That gap in coverage could mean thousands of dollars in out-of-pocket nursing home expenses.

There is also a geographic requirement that catches some families off guard. An applicant must establish a QIT in Georgia. A QIT established in another state cannot be used to qualify for Georgia Medicaid. This comes up when a family member is caring for an elderly parent who recently moved to Georgia from another state. If they have a trust set up in their former state, it will not satisfy Georgia’s requirements. A new QIT must be established in Georgia.

Another timing issue involves who can legally sign the trust. The Medicaid recipient can sign the Qualified Income Trust, or their Power of Attorney or court-appointed conservator can do so, but the Medicaid recipient may not be the trustee. If the applicant lacks the mental capacity to sign and there is no valid Power of Attorney in place, the family may need to go through the court system to appoint a conservator before the QIT can even be created. That process takes time, and every day of delay is a day of uncovered nursing home costs. This is why having your estate planning documents, including a durable Power of Attorney, in order well before a crisis arises is so important. Slowik Estate Planning helps Atlanta-area families put these protections in place proactively.

Mistake #4: Improper Monthly Funding and Unauthorized Disbursements

Setting up the QIT correctly is only half the battle. The trust must also be managed properly every single month for as long as the Medicaid recipient is receiving benefits. This is where many families run into serious trouble. If the trustee fails to properly handle the Qualified Income Trust, this may result in the termination of Medicaid benefits for the resident, as well as an obligation to repay the program for payments made on the resident’s behalf during those months that the Qualified Income Trust was improperly managed.

What does proper management look like? Handled properly, the Qualified Income Trust will always have a zero balance at the end of each month, with the only exception being if the bank requires a minimum balance to hold the account open. The trustee must deposit the required income, pay the patient liability to the facility, pay the personal needs allowance, and handle any allowable diversions to a community spouse, all before the end of the following month. Payment for the applicant’s medical care must be paid by the end of the month following the month the income is received. If payments are not made, the applicant is not following the provisions of the trust and is not eligible for Medicaid benefits.

Unauthorized disbursements are another major risk. The only income removed from the QIT should be for payment of the patient liability to the facility, the Personal Needs Allowance, diversion to the community spouse or dependent children, and medical expenses of the community spouse or other medical expenses of the applicant not covered by Medicaid. Paying for anything outside of this list, even something that seems reasonable, can count as income to the applicant and disrupt eligibility. This is why trust administration for a QIT requires careful attention to detail each and every month. Families who take on the trustee role without proper guidance often make mistakes that are difficult and expensive to fix.

Mistake #5: Naming the Wrong Trustee or Failing to Plan for Trustee Changes

The choice of trustee is one of the most important decisions in the QIT setup process, and it is one that families often treat too casually. Georgia rules are specific about who can and cannot serve in this role. The applicant may not act as his or her own trustee. This makes sense because the whole structure of the QIT depends on someone other than the Medicaid recipient controlling the funds. A spouse may serve as trustee, and anyone named by the QIT who is willing and capable of acting in that position may serve as trustee.

The problem is that life changes. A trustee may become ill, move away, or simply become unable or unwilling to manage the trust. If the trust document does not clearly spell out how a trustee is replaced, or if the replacement process is not followed correctly, the QIT can fall into disarray. The resignation of the old trustee and the appointment of a new trustee must be in writing, witnessed, notarized, and attached to the QIT, and depending on the provisions of the trust, it may be necessary to have the old trustee, new trustee, and the grantor or their guardian or Power of Attorney sign the resignation and new appointment document. Missing any of these steps can create a gap in proper trust management that jeopardizes Medicaid eligibility.

Families also need to think carefully about whether the person they choose as trustee has the time, organization, and financial discipline to handle the monthly responsibilities. This is not a passive role. The trustee must track income deposits, make timely payments, keep records, and communicate with the DFCS caseworker as needed. Choosing the wrong person, even someone with the best intentions, can lead to missed payments and a loss of benefits. If your family needs help thinking through trust beneficiaries and trustee responsibilities as part of a broader estate plan, Slowik Estate Planning is here to guide you through every step. We also help families with a wide range of estate planning matters, from pet guardianships to complex Medicaid planning strategies. Contact our Atlanta office today to schedule a consultation and protect your family’s future.

FAQs About Qualified Income Trust Mistakes in Atlanta, Georgia

What happens if my loved one’s QIT is set up incorrectly in Georgia?

If the QIT does not meet Georgia’s requirements, the DCH caseworker will not accept it. The trust assets may be counted as a resource, which would likely push the applicant over the $2,000 asset limit and result in a denial of Medicaid benefits. In some cases, benefits that were already paid out may need to be repaid. It is important to have the trust document reviewed by an attorney familiar with Georgia Medicaid rules before submitting it.

Can the Medicaid applicant be their own QIT trustee in Georgia?

No. Georgia rules are clear that the Medicaid applicant cannot serve as their own trustee. The trustee must be someone else, such as a family member, friend, or professional. The applicant, their Power of Attorney, or a court-appointed conservator can sign the trust document to create it, but the person managing the funds on a monthly basis must be a separate individual.

What income can be deposited into a Georgia QIT?

Only the applicant’s own income can go into the QIT. This includes sources like Social Security, pension payments, veterans’ benefits, and accumulated interest. Assets such as savings account balances, proceeds from property sales, or inheritance money cannot be deposited into the QIT. The account must contain only income, and funds from different sources must never be mixed into the QIT account.

How quickly does a Georgia QIT need to be set up once nursing home care begins?

The QIT needs to be established as quickly as possible because it cannot be backdated. It only takes effect in the month it is signed by all required parties. Any month that passes without a valid QIT in place is a month that Medicaid will not cover, even if the applicant would have otherwise qualified. If you know nursing home care is coming, contact an estate planning attorney right away to get the process started.

What happens to the money left in a QIT when the Medicaid recipient passes away?

When the Medicaid recipient dies, any remaining funds in the QIT go to the Georgia Department of Community Health (DCH) as reimbursement for the Medicaid benefits paid on the recipient’s behalf. The QIT is not a tool for preserving assets for heirs. Its sole purpose is to help the applicant qualify for Medicaid by diverting income that would otherwise put them over the income cap. Families who want to preserve assets for heirs should discuss broader estate planning strategies with an attorney.

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