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Terminating a Trust

When a trust is terminated, MSNT follows the terms and conditions of the trust agreement. MSNT trusts are terminated for the reasons described in the chart below.

Trust Type Reason for Termination
Irrevocable First- and Third-Party Trusts
  • Trust cannot be terminated by request
  • Trust account balance falls below the minimum balance requirement
  • Death of the life beneficiary
  • MSNT determines that the trust should be terminated because it is no longer practicable as determined by the board
Revocable Third-Party Trusts
  • Revoked at the written request of the donor
  • Revoked at the written request of the co-trustee as authorized by the donor in the trust agreement
  • Trust account balance falls below the minimum balance requirement
  • Death of the life beneficiary
  • MSNT determines that the trust should be terminated because it is no longer practicable or consents to transfer to a successor trust
  • Life beneficiary ceases to have a disability

The termination process requires 30 to 45 days to complete and may take longer in some instances. A final quarterly sub-account statement will be mailed the quarter following the termination to the person indicated to receive statements. The most common reasons for terminating a trust are low balance and the death of the life beneficiary.

Low Balance

MSNT requires a minimum balance of $500. Once the sub-account balance falls below $500, the co-trustee, life beneficiary or other responsible party is notified, and additional funds may be deposited. If additional funds are not available, MSNT initiates termination.

  • First-Party Trust: MSNT notifies the Medicaid program in each state that the life beneficiary has received benefits. Federal regulations allow for payment of fees, tax preparation fees and final taxes (if appliable) before Medicaid claims are paid. Once the Medicaid claim is received, MSNT notifies the financial institution and issues all final distributions.

If Medicaid does not make a claim, or claims are less than the full remainder balance, the final distribution will be issued to the life beneficiary.

  • Third-Party Trust: MSNT notifies the financial institution the trust is being terminated. Federal regulation allows payment of administrative fees, tax preparation expenses, trust taxes due (if applicable) and the contribution to the charitable trust, if used. MSNT distributes the remainder funds in accordance with the trust agreement.

 

Life Beneficiary’s Death

The co-trustee is responsible for notifying MSNT of the death of the life beneficiary as soon as possible. MSNT requires a copy of the life beneficiary’s death certificate to initiate termination and cannot approve request for funds after the death of the life beneficiary.

First-Party Trust

MSNT notifies the Medicaid program in each state that the life beneficiary has received benefits. Federal regulations allow for payment of fees, tax preparation fees and final taxes (if appliable) and contribution to the charitable trust before Medicaid claims are paid. Once the Medicaid claim is received, MSNT notifies the financial institution and issues all final distributions. If Medicaid does not make a claim, or claims less than the full remainder balance, the final distributions will be issued to the named remainder beneficiaries in the trust agreement.

Third Party Trust

MSNT notifies the financial institution the trust is being terminated. Federal regulation allows payment of administrative fees, tax preparation expenses, trust taxes due (if applicable), and the contribution to the Charitable Trust, if used. The final distributions will be issued to the named Remainder Beneficiaries in the trust agreement.

 

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