Resident Trust Funds – Distribution Upon Death
This client alert advises facilities on what to do with the remaining resident trust funds following a resident death. Problems generally arise when the resident, upon admission, fails (or refuses) to designate a named beneficiary.
Avoiding the Issue.
It's important to ensure the resident names a beneficiary for the funds in the event of the
resident’s death. During the admission process, the resident should designate a beneficiary in writing using the Beneficiary Designation Form provided by DHS. A second beneficiary can be named in the event the first beneficiary is unavailable. If the resident does not want to name a friend/relative as a beneficiary, the resident should be encouraged to consider naming a non-profit organization of his/her choice, or even DHS. Remember, the resident’s named beneficiary cannot be an administrator, employee, owner, or representative of the long-term care facility. The facility should document that all beneficiary designations are the result of the resident’s independent choice, and the Beneficiary Designation Form must be completed in
the presence of and signed by two (2) witnesses.
Distribution to the Estate.
Within thirty days of the resident’s death, the facility administrator must provide an accounting, and return all refunds and funds to the personal representative of the deceased resident’s estate. A personal representative is someone appointed by court order to administer the deceased’s estate. If no personal representative has been appointed, which is often the case, then the funds are released to the resident’s named beneficiary or surviving spouse.
What if there is not a personal representative, named beneficiary, or surviving spouse?
If there is no personal representative, named beneficiary, or surviving spouse, or if there is but the person cannot be located, the funds must be deposited into an interest-bearing account in the same county in which the facility is located, if possible. For trust funds of deceased residents that are equal to or over $100, the facility must maintain separate interest-bearing accounts. These accounts must be maintained for five years after the date of the resident’s death unless a probate case is opened sooner. At the expiration of five
years, the funds will need to be returned to the state.
Who needs to be notified when the funds are released?
At the time the funds are disbursed, the nursing facility notifies DHS using the Deceased Resident Personal Trust Fund Form. Beneficiary Receipt Form should be completed and a copy submitted to DHS along with the Deceased Resident Personal Trust Fund Form.
How can Conner & Winters help?
Conner & Winters has experience dealing with a wide variety of day to day and transactional needs for long-term care and other clients. Please contact us if you have any questions or if you would like assistance with this or other matters.