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

Before you buy

Who this kit isn't for

We'd rather you not buy something you don't need. Skip it if:

• The income is at or under $2,982/month. A Income Trust usually isn't needed. Check the number with the free income-cap check.
• The obstacle is savings or property, not income. A Income Trust only deals with income. See Medicaid asset protection trusts for the asset side.
• Money or property was given away in the last five years, or other trusts are involved. That needs a South Carolina elder-law attorney.
• You want someone to fill it in and file it for you. That's what an attorney does. This kit is for doing it yourself, or for checking someone else's work.

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. I read every SCDHHS policy section on these trusts and tied every step in this kit to the section it comes from, so you can check any of it yourself. I'm a researcher, not an attorney. For advice on your own situation, a South Carolina-licensed attorney is the right call.

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 because of something in 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. If the agency hasn't decided within 30 days, email anyway: the guarantee still applies once you have the denial.

▸ 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.

▸ Will SCDHHS accept an Income Trust I fill in myself?

SCDHHS Form 905, the Income Trust Agreement, says: 'It is not required to use an attorney, but you may do so if you wish.' The completed pages go back to the Medicaid office, and SCDHHS's Income Trust Checklist (Form 907) lists what it looks for, including intact signatures for the beneficiary, trustee, witnesses and notary, and a completed Schedule A. Form 905 requires two witnesses for the settlor's signature and two for the trustee's. Acceptance is the agency's decision, so no outcome can be promised. The kit walks through signing and naming the trustee.

▸ 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.

▸ 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.

▸ Do I need a Miller Trust in South Carolina?

It applies when the person who needs long-term-care Medicaid has gross monthly income over South Carolina's income cap of $2,982 (CMS January 2026 figures). Count gross income before any deductions: Social Security, pension, annuity and similar income paid in their name. It applies the same way whether you're their child, their spouse, or a professional helping them. If the income is under the cap, a Miller Trust usually isn't needed. If you're the spouse staying at home, only the applicant's own income counts toward this cap, not yours; separate federal protections, a resource allowance and, when your own income is low, a monthly income allowance, keep you from being left without enough to live on.

▸ What if SCDHHS changes the form or the income cap after I buy?

If SCDHHS revises its form or policy within 12 months of your purchase, email support@millertrustguide.com and we'll send the updated edition free. This page shows the date it was last verified against SCDHHS (September 9, 2026). The income cap is different: it's a routine yearly adjustment that follows the federal benefit rate each January, SCDHHS publishes the new figure, and you use it in place of the old one; the steps stay the same.

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 September 9, 2026. Email support@millertrustguide.com if anything below conflicts with what SCDHHS currently publishes — we correct verified discrepancies within five business days.