South Carolina Income Trust Setup Guide — Qualify a Family Member for Medicaid Before the Next Billing Cycle

The bank step

The bank refusal nobody warns you about

You walk into your branch with the signed trust. The teller calls a manager. The manager has never seen one. They ask for an EIN. They tell you to come back with an attorney. You drive home with an empty trust account and a Medicaid clock ticking.

This is the single most common reason South Carolina families lose a month of benefits, and it has nothing to do with the trust itself — it is a bank-procedure problem. The kit's bank section gives you the exact language to cite at the counter, the SCDHHS policy reference to read aloud, and a printable resolution letter you can hand to the branch manager so they can escalate inside their own bank instead of sending you away.

Refusals the kit walks you through:

• Branch asks for a tax ID (EIN) for the trust.
• Branch sends you to its trust department.
• Branch is unsure how to title the account or who may be on it.
• Branch is unsure how income should arrive in the account.
• Branch has never opened an Income Trust account.

Each refusal has a corresponding response in the kit, with the SCDHHS citation behind it.

Avoid these

The 7 most common South Carolina denial reasons

Every denial reason below cites SCDHHS policy. The full kit explains each one in context and the order in which to verify them before submitting the Medicaid application.

▸ An asset (not income) is placed in the trust

The single most explicit invalidator in South Carolina. Schedule A states in bold that the trust is to be funded SOLELY with income, and that placing any asset — stocks, bonds, certificates of deposit, real or personal property — into the trust renders it invalid for the Income Trust exception. The trust document repeats that no property other than income shall be used to fund it. — SC DHHS Form 3270 ME (Schedule A); DHHS Form 905, Trust Estate

▸ Income does not flow through the trust in the month coverage is sought

Eligibility cannot be established before the month the trust is signed, and the applicant must provide verification that the income for any month coverage is desired was actually deposited into the trust account — SCDHHS requires this before the application can be approved. A month in which the income did not flow through the trust is not covered. — SC DHHS Form 905 (Memorandum of Understanding); DHHS Form 906 (Trustee Checklist)

▸ Schedule A is missing or incomplete

A completed Schedule A — listing the income assigned to the trust and the designated bank and account number, signed by the trustee — is a stated requirement for the trust's validity. A trust submitted without it is not acceptable. — SC DHHS Form 905, Trust Estate; DHHS Form 3270 ME (Schedule A)

▸ The account is used like a personal checking account

The trust account's funds may be used only for expenses authorized by Medicaid. The trustee may write a check for the personal needs allowance to the beneficiary, or a spousal allocation check to the community spouse, but may NOT write checks to third parties on their behalf (for example, the electric company or a doctor's office). Misusing the account this way violates the trust. — SC DHHS Form 906 (Trustee Checklist)

▸ Trust is not irrevocable or is improperly executed

The trust must be irrevocable (it may be modified or terminated during the beneficiary's life only by agreement of the beneficiary, the trustee, and SCDHHS, or by the probate court). Execution must be complete: the document and the Statement of Trustee must be signed, the settlor's and the trustee's signatures each require two witnesses, and the Statement of Trustee must be notarized. Missing signatures, witnesses, or notarization make the trust unacceptable. — SC DHHS Form 905 (execution + paragraph 8.02); DHHS Form 907 (Checklist)

▸ Applicant named as their own trustee

DHHS Form 905 and the SCDHHS information sheet both state the applicant/beneficiary cannot serve as their own trustee. A separate trustee must be appointed. — SC DHHS Form 905; DHHS Form 906

▸ Missing SCDHHS secondary-beneficiary (payback) clause

The trust must name the single state Medicaid agency (SCDHHS) as the 'Secondary Beneficiary' with an interest in the trust up to the total medical assistance paid for the beneficiary, with only the excess passing to the estate. DHHS Form 905 already contains this clause; removing or altering it makes the trust unacceptable. — SC DHHS Form 905, Trust Beneficiaries and paragraph 5.05

The author

Who's behind this

I'm James Whitfield — the person who hit the gap between the free state PDF and a funded Medicaid trust (the short version is up top) and built this kit to close it. I'm not an attorney. I'm a researcher who has now read every SCDHHS policy section that covers Qualified Income Trusts, and I publish what I learned with a citation on every claim. I won't advise you on your specific situation, draft anything, or review a document you or your attorney have drafted; for advice on your situation, you need a South Carolina-licensed attorney.

Questions

Frequently asked questions

▸ Is the South Carolina Income Trust Kit legal advice?

No. This kit is informational only and is not legal advice. We are not attorneys and we do not practice law. The kit teaches you how to use South Carolina's publicly-published Income Trust forms (DHHS Form 905 and its companions). For advice on your specific situation, consult a South Carolina-licensed elder-law attorney.

▸ What does the kit include?

A step-by-step operational guide: a plain-English explanation of how a South Carolina Income Trust works, direct links to the official SCDHHS Form 905 template plus the trustee information sheet (Form 906), Schedule A (Form 3270 ME), and the worker checklist (Form 907), instructions for filling the numbered blanks, a monthly funding worksheet, the bank-account walkthrough with a branch script, the month-by-month funding process, and a South-Carolina-specific list of common denial reasons. Delivered as a single PDF.

▸ Do you provide the trust template itself?

No. We never author or host trust instrument text. The kit links you to the SCDHHS-published Form 905 on the state's .gov site. You download the template directly from SCDHHS. We explain how to use it, fund it, and keep it compliant. SCDHHS's own forms say it is not required to use an attorney.

▸ Who has to set up an Income Trust in South Carolina?

An applicant for Nursing Home or Home & Community-Based (Community Long Term Care) Medicaid whose gross monthly income is over the Medicaid Cap ($2,982/month in 2026) must establish an Income Trust to become income-eligible, provided they meet the other requirements. The applicant cannot serve as their own trustee.

▸ How does the money work?

Each month the applicant's income flows through the trust account and is used to pay toward the cost of care, after allowable deductions — the $60 personal needs allowance, any community-spouse or dependent allowance, and certain medical/health-insurance costs. Income that flows through the trust does not count toward the Medicaid Cap. A small $10/month maintenance reserve may stay in the trust; any other excess is retained in the trust, not spent.

▸ Does all of a person's Social Security or pension have to go into the South Carolina Income Trust?

No. South Carolina's own Medicaid manual allows partial funding: you can place only part of a specific income source into the trust, as long as Schedule A states the exact dollar amount being assigned. Any portion of that income NOT listed on Schedule A and deposited into the trust is counted as regular income against the Medicaid Cap, so most people list and deposit the full amount needed to get under the cap — but South Carolina does not require the full amount from every source.

▸ Is Social Security counted before or after the Medicare Part B premium in South Carolina?

After. South Carolina's Medicaid manual instructs eligibility workers to use the Social Security Administration's 'net monthly benefit' figure — the amount actually paid after the Medicare Part B premium is withheld — as the countable income figure for the Medicaid Cap and Income Trust calculation. The Part B premium is not applied as a separate deduction later; it is already excluded from the number used to test eligibility and size the trust deposit.

▸ What order does South Carolina pay expenses out of the Income Trust each month?

South Carolina's Medicaid manual sets a specific order for deductions from gross income before the balance goes to the nursing facility: (1) the personal needs allowance ($60/month standard, more for work-therapy or HCBS-waiver participants); (2) court-ordered guardianship fees, if any; (3) for Income Trust cases specifically, the $10/month trustee fee, up to $20/month in actual bank charges, and any income tax owed by the trust; (4) the community spouse's income allowance (up to $4,066.50/month in 2026, reduced by the spouse's own income); (5) an allowance for other dependent family members; (6) health insurance premiums other than Medicare Parts A and B (Medicare Part D is allowed net of South Carolina's benchmark amount); (7) a temporary home maintenance allowance if a doctor certifies an expected return home; and (8) certain non-covered medical expenses. Whatever remains is the patient's monthly cost-of-care payment to the facility.

▸ Does a South Carolina Income Trust need an EIN?

No separate EIN is created by the trust. SCDHHS puts the account in the names of the applicant/beneficiary and the trustee, and a Miller-type income trust is a grantor trust reported under the beneficiary's Social Security number. The account does not have to be opened through a bank's trust department.

▸ When does coverage begin?

Eligibility cannot be established before the month the trust document is signed — there is no back-dating — and the applicant must show that the income actually flowed through the trust for any month coverage is sought, which SCDHHS requires before approving the application. So complete the trust and route the income through it as early in the month as possible.

▸ What if my bank refuses to open the trust account?

Bank refusal is common on a first attempt. The kit includes a branch script and the most common refusal types (EIN demand, being sent to a trust department, titling confusion, how income should arrive) with the SCDHHS facts that resolve each — the account is an ordinary separate account in the names of the applicant/beneficiary and trustee, holds only income, and need not go through a trust department.

▸ Can I be my own trustee in South Carolina?

No. Per DHHS Form 905, the applicant/beneficiary cannot serve as their own trustee — a separate trustee must be appointed (a family member, an attorney-in-fact, a guardian or conservator, or another willing person). No bond is required, and a successor trustee is named by agreement of the beneficiary and SCDHHS, or by the probate court if they can't agree.

▸ What happens to the trust after the person on Medicaid passes away?

The Income Trust terminates upon the beneficiary's death. The trustee must promptly notify SCDHHS and may not distribute remaining trust funds until SCDHHS's reimbursement claim is resolved, then pays SCDHHS up to the total previously un-reimbursed medical assistance paid for the beneficiary. Only the balance remaining after that passes to the beneficiary's estate.

▸ Do you offer a refund?

Yes — money back if SCDHHS rejects the Income Trust for any reason traceable to following the kit. Email support@millertrustguide.com within 30 days of purchase with the agency's stated denial reason and we issue a full refund within one business day.

▸ Will you talk to me on the phone about my situation?

No. We do not offer phone support and we do not advise on individual situations. For advice on your specific situation, consult a South Carolina-licensed elder-law attorney — you can find one through the South Carolina Bar's Find a Lawyer service or South Carolina Legal Services.

▸ Do you need an EIN to open a South Carolina Miller Trust account?

DHHS Form 905 puts the trust account in the names of the applicant/beneficiary and the trustee only, and does not specify a separate tax identification number. A Miller-type income trust is a grantor trust reported under the beneficiary's Social Security number — the trust itself does not create an EIN. (South Carolina's forms do not state a tax-ID requirement; this reflects standard IRS treatment of a grantor income trust, so if a bank asks, the beneficiary's SSN is the identifier.) The account need not be opened through a bank's trust department.

▸ Who can serve as trustee of a South Carolina Miller Trust?

Per DHHS Form 905, the applicant/beneficiary cannot serve as their own trustee — a separate trustee must be appointed (a family member, an attorney-in-fact under a Durable Power of Attorney, a guardian or conservator, or another willing person). The trustee is responsible for having the income deposited, withdrawing only allowed deductions, and accounting for every dollar in and out; the Statement of Trustee must be signed, witnessed, and notarized, and the trustee is personally liable for any misuse of trust funds. No bond is required. A successor trustee is named by agreement of the beneficiary (or representative) and SCDHHS, or by the probate court if they cannot agree. South Carolina allows the income to flow into the trust account by direct deposit, by depositing the check, or by transfer from another account — each month the income must flow through the account for any month coverage is sought. A $10/month maintenance reserve may be retained for bank charges, a tax return, or trustee compensation if no one will serve without pay (SCDHHS may authorize more).

▸ Which banks will open a Qualified Income Trust (QIT) bank account in South Carolina?

There's no published list of banks that offer QIT accounts — most retail branches simply haven't opened one before, since it's an uncommon account type, not because anything is wrong with the trust itself. In practice: larger banks (Chase, Wells Fargo, Bank of America) generally have a centralized trust department that can process the request even when a branch teller can't; full-service branches (often a market's main branch) open commercial and trust-style accounts more routinely than limited-service branches; and community banks and credit unions are frequently the most willing, since their account-opening process tends to involve a human review rather than a screen-driven template. DHHS Form 905 puts the trust account in the names of the applicant/beneficiary and the trustee only, and does not specify a separate tax identification number. A Miller-type income trust is a grantor trust reported under the beneficiary's Social Security number — the trust itself does not create an EIN. (South Carolina's forms do not state a tax-ID requirement; this reflects standard IRS treatment of a grantor income trust, so if a bank asks, the beneficiary's SSN is the identifier.) The account need not be opened through a bank's trust department. The kit includes the exact script to use at the counter and a printable letter for a branch manager if the first attempt is refused.

▸ When does South Carolina Medicaid coverage begin after the Qualified Income Trust is set up?

Coverage begins the calendar month the QIT is signed, the trust account is opened, and enough of the applicant's income is deposited to bring remaining countable income below the 2026 special income limit of $2,982/month — all in the same calendar month. There is no back-dating, so every month of delay is another month of full private-pay care ($9,034–$9,612/month in South Carolina). Source: SCDHHS SCDHHS Healthy Connections Nursing Home / HCBS eligibility (Medicaid Cap = 300% of the SSI Federal Benefit Rate); DHHS Form 905, the Income Trust Agreement (January 2026); and SC Medicaid Policy and Procedures Manual (MPPM) §301.09.02 (income counting) and §304.15.02A / §304.19.04-.06A (Income Trust funding and the post-eligibility deduction order).

▸ What happens to the money in a South Carolina Miller Trust when the beneficiary dies?

The Income Trust terminates upon the beneficiary's death (DHHS Form 905, paragraph 5.05). The trustee must promptly notify SCDHHS and may not use or distribute any remaining trust funds until SCDHHS's reimbursement claim is resolved. The trustee then pays SCDHHS — the named Secondary Beneficiary — an amount up to the total previously un-reimbursed medical assistance paid for the beneficiary, and only the balance remaining after SCDHHS is reimbursed in full passes to the beneficiary's estate. If the trust account was a joint account, any survivorship rights take effect only after the trust's obligations to SCDHHS are satisfied. The forms do not print a specific remittance address; confirm the current instructions with SCDHHS at termination.

▸ Can you set up a South Carolina Miller Trust without a lawyer?

For the core Qualified Income Trust setup, the task is following SCDHHS's publicly-published template and opening a specific kind of bank account — work many families do themselves. Attorneys typically charge $1,000–$2,500 for it. For complex situations (significant assets, prior gifting, second marriages, multi-state property), consult a South Carolina-licensed elder-law attorney. Miller Trust Guide is informational only and is not legal advice; we do not draft the trust or advise on individual situations.

▸ Can an attorney, paralegal, or care manager use this kit for a client?

Yes. It explains South Carolina's own published Income Trust process in plain language, which works whether you're doing this for your own family member or for a client — professionals handling a case outside their usual specialty use it as a working reference this way. It doesn't replace your own judgment on a specific client's facts and isn't personalized advice; it's the same walkthrough of South Carolina's official form either way. If you expect to use it across more than a handful of clients or want redistribution rights, email support@millertrustguide.com about licensing options.

Keep reading

Step-by-step South Carolina guides

New to this? What Is a Miller Trust? covers the plain-English basics — what it is, why states use different names for it, and how it differs from a Medicaid Asset Protection Trust. Below are the free operational walkthroughs that go deeper on the questions South Carolina families ask most.

Primary sources

State agency sources

Last verified against SCDHHS on 2026-09-09. Email support@millertrustguide.com if anything below conflicts with what SCDHHS currently publishes — we correct verified discrepancies within five business days.