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changing rules governing eligibility for Medicaid. Baxter
suggested to the Hickses that they create two trusts for
Kimberly.
The first was the Kimberly Hicks Special Needs Trust.
Baxter designed the Special Needs Trust to comply with section
1396p(d)(4)(A) of the Medicaid Payback Trust Act, which had just
been enacted in 1993. 42 U.S.C. sec. 1396p(d)(4)(A) (2007).
Beneficiaries of trusts that comply with the Act’s provisions
need not exhaust trust assets to qualify for Medicaid or other
government assistance, since the assets of this kind of trust
don’t count in determining eligibility for Medicaid. When the
beneficiary dies, however, the State gets back from the trust
whatever it paid for medical care on her behalf. Id. Kimberly’s
Special Needs Trust would pay expenses uncovered by government
assistance or her health insurance. It was to be funded with $1
million from the Conrail settlement.
The second trust was the Kimberly Hicks Settlement Fund
Management Trust, and was to be available to Kimberly for her
“support, maintenance, health and education.” This trust was to
be funded in part by another $450,000 from the Conrail
settlement.5 This trust’s assets, however, would be counted in
5 The Management Trust agreement recited that the settlors
of the Trust were Clyde and Theresa, even though all the other
documents in the record showed it funded from another $450,000 of
the Conrail settlement to be allocated to Kimberly. The parties
(continued...)
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Last modified: November 10, 2007