If you are the trustee of a parent's income cap trust in Oregon, your monthly job is to make sure all of your parent's income passes through the trust account and then pay it out in the order Oregon's Medicaid rules set. Your parent's personal needs allowance comes out first, along with the room and board payment if the care setting is assisted living or another community-based care facility. A small allowance for the trust's own costs comes next, then any spousal allowance, insurance premiums, and a few other permitted items. Whatever remains goes to the care provider as your parent's share of the cost of care, which ODHS calls patient liability. The account is a pass-through, and the trust stays valid only as long as you run it that way.
Why the trustee's job matters
For 2026, the income limit for Oregon long-term care Medicaid is $2,982 a month for a single person. Someone whose income is even a dollar over that figure is ineligible unless an income cap trust is in place. The trust works because your parent gives up direct control of the income: it flows through an irrevocable trust that a trustee manages under rules the state wrote. ODHS guidance says the person receiving care should not serve as trustee of their own trust, which is why the job usually falls to an adult child or another family member. My income cap trust post explains why these trusts exist and when someone needs one. This post is about running one after it is signed.
The signed trust document is what makes your parent eligible, and the way you handle the account each month is what keeps them eligible.
What goes into the trust each month?
All of it. Oregon's rule requires an income cap trust to contain all of the person's income, including the portion that sits under the cap. Social Security, pensions, annuity payments, and any other regular income all belong in the trust account each month.
The trust holds only that income. The rule describes a trust containing the current and accumulated income of the individual and nothing else, so savings, the proceeds of selling a car, or money from anyone else do not belong there. Adding them takes the trust outside what the rule allows.
In what order does the money come out?
The rule lists the permitted payments in a fixed sequence. For a typical older adult in care, the ones that matter are these, in this order.
The personal needs allowance comes first. In 2026 that is $81.28 a month for a nursing facility resident and $221 a month for someone in community-based care such as assisted living or a residential care facility. For a community-based care resident, the room and board payment to the facility comes out at the same step; the 2026 standard is $773 a month. The personal needs allowance belongs to your parent for personal expenses, such as clothing, a haircut, or a phone.
Administrative costs of the trust come next, capped at $50 a month in total. That cap covers everything the trust itself costs to run: any fee you pay yourself as trustee, bank service charges, postage, tax preparation, a reserve for future legal costs, income taxes on trust income, and conservatorship or guardianship fees if there is a court case.
If your parent has a spouse still living at home, the community spouse allowance comes after administrative costs, along with any allowance for dependent family members. ODHS calculates these amounts.
Medicare and other private health insurance premiums follow, then other medical costs ODHS allows, then payments or reserves for child support, alimony, and income taxes.
Patient liability comes last. Whatever income is left after the permitted deductions goes to the nursing facility or care provider, up to the cost of care. For most people this is the largest payment by far.
Who decides the dollar amounts?
ODHS does. The caseworker calculates the patient liability and the allowances and sends a notice stating what your parent owes the provider each month. The trustee pays according to that notice. ODHS staff guidance says that when a client's income or a program standard changes, the agency recalculates and sends a new notice; the trust document itself does not change. Social Security cost-of-living increases arrive in January, and Oregon updates many of its Medicaid figures each July, so expect the numbers to move at least once or twice a year.
Keep every notice. When the deposit and the notice stop matching, the notice is what you work from, and a mismatch you cannot explain is a reason to call the caseworker before the next payment goes out.
What records does the trustee need to keep?
The trust should have its own bank account in the trust's name, separate from your parent's other accounts and from yours. Every month the statement should show the income arriving and the permitted payments leaving. Keep the statements, the ODHS notices, receipts for anything paid as an administrative cost, and a simple monthly record that ties each deposit to each payment.
ODHS can review eligibility at any renewal and whenever it learns of a change. A trustee who can produce a year of statements that line up with the notices is in a strong position. A trustee who has been paying bills out of the trust account informally will have a hard time showing the trust was run as the rule requires. Beyond the Medicaid rules, you are also a trustee under Oregon trust law, which means you owe your parent loyalty and care in how you handle the money, and good records are how you show you met that duty.
What if there is money left over at the end of the month?
A small balance that carries over from timing, such as income arriving after the facility has already been paid, is ordinary. A balance that grows month after month is a problem. The rule requires the income to be distributed monthly in the order it sets, and it treats amounts paid outside that order under the transfer-of-assets rules, the same rules that impose penalty periods for gifts. Paying a grandchild's tuition, reimbursing yourself beyond the $50 cap, or covering a family member's expense out of the trust account is the kind of payment that creates exposure.
If a surplus builds up, the answer is to sort out why with the caseworker, not to spend it down on your own judgment.
What happens if a month is missed?
The rule's requirement is that the trust contain all of your parent's income. When a month's income never passes through the trust, the rule's text points to that income counting against the cap for that month, the same as if no trust existed, which can cost eligibility for the month. The rule does not spell out a cure, so if you discover a missed deposit, contact the caseworker promptly and get legal advice before trying to fix it by moving money around after the fact.
A missed month can come from a change nobody planned for, such as a new pension payment, a bank changing its deposit routing, or a trustee who is sick or traveling. Naming a successor trustee in the document, and making sure that person knows where the account and the notices are, is part of drafting the trust well.
What happens when your parent dies?
The trust ends, and the rule requires that any balance remaining be paid to the State of Oregon, up to the total amount of medical assistance Medicaid paid on your parent's behalf. The balance does not pass to the family and is not available for funeral costs. This payback is written into the trust itself. It is separate from Medicaid estate recovery, which reaches the other property your parent leaves behind.
Frequently asked questions
Can I pay myself for serving as trustee? Only within the $50 monthly cap, and that cap also has to cover bank charges, postage, and every other cost of the trust. In practice there is little room for a trustee fee.
Can my parent serve as their own trustee? ODHS guidance says no. The trust qualifies your parent because they have given up direct control of the income, and serving as trustee would undo that.
Does the trust need to be changed when the income goes up? No. ODHS recalculates the patient liability and sends a new notice. The trust's payment order stays the same.
What if my parent's income later drops below the cap? Report the change to the caseworker and get legal advice before changing anything. The trust is irrevocable, and whether it is still needed depends on how the income compares to the cap going forward.
How I fit in
I draft income cap trusts for Oregon families, and the package includes a certificate of trust for the bank and written funding instructions for the trustee, so the person running the account starts with the document's requirements in hand. I also handle Medicaid applications, billed hourly and scoped with you before any work begins. If you are already serving as trustee and something on a notice or a statement does not make sense, a consultation is the place to ask. The fee buys the questions, and the questions are where trustees get into trouble.
I do not handle contested matters, including contested guardianships and conservatorships. For those, the Oregon State Bar's Lawyer Referral Service can connect you with litigation counsel.
Bottom Line
An income cap trust trustee in Oregon puts all of the parent's income into the trust account each month and pays it out in the order the rule sets: personal needs allowance and any room and board, up to $50 for trust costs, spousal and insurance items, and the rest to the care provider as patient liability. ODHS sets the dollar figures by notice, and the trustee follows the notice. The trust only keeps working if it is run as a pass-through, with clean records, every month, and when your parent dies whatever remains goes to the state.
If you have been named trustee, or your parent's income is over the limit and a trust is needed, Book a free consultation here.
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This post is general information about Oregon law, not legal advice for your situation. Reading it does not create an attorney-client relationship.
