Miller Trust bank accounts are not the same as traditional bank accounts. Here’s why:
The bank accounts opened to fund a Qualified Income Trust (the technical name for a Miller Trust) operate more like a “representative account” for the payment of a disabled persons expenses. It is not a typical asset-type trust fund. They are considered an income only trusts. Because there are no significant assets placed in the trust there are none of the usual trust management issues you would encounter when assets are involved.
Unfortunately, some bank personnel confuse the setup of an income only trust with the administrative requirements of an asset trust.
You may find the banker will incorrectly insist you obtain a separate tax ID number. For income tax purposes, the Miller trust bank account is considered a “grantors trust”. As such, there is no separate trust tax ID number required. The bank should use the Social Security number of the grantor for the account. When the banker demands a different tax identification number, you lose valuable time qualifying for Medicaid nursing home support. Although the IRS typically responds fairly quickly, you run the risk of a potentially costly delay waiting for the tax member to be issued.
Because Miller Trusts are used by a small population of people who need nursing home care, most bankers are not familiar with the steps for setting up Miller Trust bank accounts in Texas. We have even experienced where one bank representative at a location knew how the bank should open the trust account and others didn’t. It can be very frustrating. By the way, the type of account I recommend is either a checking account or a money market account with check writing access. Keep these four points in mind when you set up and manage the account:
- The Miller Trust bank account must be titled as a trust account. For example, “The John Smith Income Trust”, where John Smith is the grantor of the trust (he grantor is the person for whom the trust is established).
- Only the person named as the trustee (the person responsible for managing the trust account) is authorized to sign checks. No other individual can write checks on the trust account, not even the grantor.
- Do not attach a debit card or credit card to the account.
- As trustee you will receive the monthly statements. Because the State may ask for an accounting, you should safeguard the monthly statements along with an itemized account of how the money is spent on the patient’s behalf.
These are the main points to keep in mind to avoid errors getting your trust established properly. I’ve only skimmed the surface about Miller Trust bank accounts in the short space available here. The main point to understand is accounts set up to fund a Miller Trust are different from regular bank accounts. That’s why it’s a good idea to work with an Texas elder law attorney who understands how and when these accounts should be set up.