What Can an Income-Only Trust Pay For in Arizona?
Arizona calls the trust an Income-Only Trust. Every month the trustee must pay the ALTCS share of cost from the trust first, and that payment can't be reduced to make room for other expenses. Other payments are limited to the uses AHCCCS policy allows, such as the personal needs allowance, allowances for a spouse or dependent, health premiums and medical expenses, and administrative expenses AHCCCS approves. Every item below is cited to AHCCCS's own published rules; where AHCCCS says nothing about an item, this page says so instead of filling the gap. This guide is informational only and is not legal or financial advice.
Income goes into an Arizona Income-Only Trust each month, and the trustee may pay it out only for the purposes AHCCCS allows. Paying for anything else can put eligibility at risk. Here is the list, with the AHCCCS source for each item.
What AHCCCS's rules allow
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Share of cost, every month
The trust must require the trustee to pay any share of cost amount from the trust income each month.
Source: AHCCCS Eligibility Policy Manual MA803.A
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Personal needs allowance
15% of the federal benefit rate ($149.10 in 2026) for someone in a nursing facility the whole month; 300% of the federal benefit rate ($2,982 in 2026) for someone at home or receiving home and community-based services. AHCCCS treats it as a shelter payment and allows it as a lump sum or for individual items.
Source: AHCCCS EPM MA1201.C and MA803.E
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Spouse or dependent allowance
Payment for the maintenance needs of a spouse or other dependent; the community spouse allowance counts only if the income is actually given to the spouse.
Source: AHCCCS EPM MA803.E and MA1201.C
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Health insurance premiums and medical expenses
Health insurance premiums, medically necessary medical expenses, and special medical needs of the beneficiary.
Source: AHCCCS EPM MA803.E
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Administrative and professional expenses
Reasonable and necessary administrative expenses approved by AHCCCS, or by the probate court with advance notice to AHCCCS; AHCCCS's list includes income taxes on trust income and reasonable accounting and attorney fees for administering the trust.
Source: AHCCCS EPM MA803.A and MA803.E
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Burial
A burial fund of not more than $1,500, under AHCCCS's list of allowed disbursements for special treatment trusts, which include Income-Only Trusts.
Source: AHCCCS EPM MA803.E
The order payments are made in
The share of cost comes first: when it is larger than the income assigned to the trust, all of that income goes to the share of cost, and the payment can't be reduced for other trust expenses (EPM MA803.E). AHCCCS gives no further order.
Trustee and bank fees
Arizona sets no dollar cap. The trust must allow reasonable and necessary administrative expenses only as approved by AHCCCS, or by the probate court with advance notice to AHCCCS (EPM MA803.A).
What the trust can't be used for
AHCCCS lists disbursements that are not allowed, including gifts, payments or loans to anyone other than the beneficiary, reimbursing third parties for the beneficiary's expenses, child support or alimony that isn't garnished, paying all the shelter costs of a shared household, vacation costs for family members, payments on past debts or credit cards, and health insurance premiums for other people. Changes to planned disbursements must be reported 45 days in advance (EPM MA803.E). Resources can't be added to the trust (MA803.C).
Timing, and money left over
Income must be deposited into the trust account in the month it is received, and the trustee makes the monthly disbursements based on the income assigned to the trust (AHCCCS form DE-819). Interest kept in the trust isn't counted as income (EPM MA803.C).
Keeping the monthly record
The trustee is the one who has to show that the trust paid only these items. A month-by-month record of every deposit and every payment, checked against the bank statement, is what makes that easy to show when AHCCCS asks.
Related: who can be the trustee in Arizona, what happens to the money at death, and the Miller Trust trustee guide for how the monthly cycle works in every state.
Trust not open yet? The account comes first
None of these payments can start until the trust account exists, and most branches have never opened one. Free one-pager: the questions to ask before you drive to a branch, emailed now. Then 4 more short emails over the next 10 days — then we stop.