Connecticut General Statutes 45a-486 (Rev. to 2003). Termination of inter vivos trust when settlor or spouse is an applicant for or recipient of medical assistance

(a) The provisions of this section shall apply to an inter vivos trust (1) established or funded on or after October 1, 1992; (2) established or funded within the same period of time prior to application for public assistance or Medicaid as is specified in Section 1917(c) of the Social Security Act or in a waiver approved by the Secretary of Health and Human Services concerning the disposal of assets for less than fair market value; and (3) in which the settlor or the settlor's spouse is a beneficiary.

(b) Upon the application of the Department of Social Services, the Superior Court shall terminate an inter vivos trust established by a person or the person's spouse when the person or the person's spouse becomes an applicant for or recipient of public assistance or Medicaid. The Superior Court shall order that the principal and any undistributed income shall be distributed to the settlor of the trust. This section shall not apply if the settlor, the settlor's spouse, a conservator or other legal representative of the settlor or the settlor's spouse, or any other person having a beneficial interest in the trust, establishes by clear and convincing evidence that not one of the principal purposes of the trust was the current or future qualification of the settlor or the settlor's spouse for benefits under Title XIX of the Social Security Act.

(c) On or after October 1, 1992, the provisions of this section shall not apply to charitable remainder trusts, as defined in Section 664(d) of the Internal Revenue Code of 1986, or any corresponding internal revenue code of the United States, as from time to time amended, nor to transfers which are deductible pursuant to Section 170(f)(2)(B), 2055(e)(2) or 2522(c)(2) of said code, nor to any trust in which the settlor or the settlor's spouse has not retained any interest, other than reversionary interest of five per cent or less.

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UPM 4030.80.B. (UP-02-104030.8)

Testamentary Trusts and Certain Inter Vivos Trusts that are not Established or Funded by the Individual or by his or her Spouse during their Lifetime

The individual's interest in a testamentary trust, and the individual's interest in a trust that was not established or funded by the individual or by his or her spouse during their lifetime, are evaluated under the cash and Medicaid programs as described in this paragraph.

  1. The Department determines whether the corpus, or principal of such a trust is an available asset by referring to the terms of the trust and the applicable case law construing similar instruments.
  2. The principal of such a trust is an available asset to the extent that the terms of the trust entitle the individual to receive trust principal or to have trust principal applied for his or her general or medical support.
  3. Under circumstances described in subparagraph 2 above, the trust principal is considered an available asset if the trustee's failure to distribute the principal for the benefit of the individual in accordance with the terms of the trust would constitute an abuse of discretion by the trustee.

The Department considers the following factors in determining whether the trustee would be abusing his or her discretion by refusing to distribute trust principal to the individual: