Discretionary Trust Deemed Available Medicaid Asset

Discretionary Trust Deemed Available Medicaid Asset

 

In April 2012, an Ohio Court of Appeals has affirmed [enhanced version available to lexis.com subscribers] the state's denial of Medicaid benefits to a deceased nursing home resident's estate, concluding that the resident's irrevocable discretionary trust was an available asset for purposes of Medicaid eligibility. The Trust, established in 1999, included all of the decedent's property.  In 2007, the decedent moved to a nursing home and later applied to the Ohio Department of Job and Family Services, the state's Medicaid agency, for nursing home benefits. The agency denied the application, concluding that her assets, which included the trust and a bank account containing $4,000, were available resources that placed her above the $1,500 resource limit. The decedent appealed the denial to the agency, arguing that she should be allowed to spend down the bank account and that the trust was not an available resource because it was established more than five years before she applied for nursing home benefits and was a discretionary trust.  Ultimately, the decedent's administrative appeals were unsuccessful and she appealed to a trial court, which affirmed the agency's denial, concluding that because the trust allowed the trustee to spend the trust's income and principal to provide for her care and maintenance should she become disabled (as she did), the entire trust was an available resource.  The decedent died while the trial court action was pending, and her estate appealed.

The Court of Appeals of Ohio, Ninth District, affirms the agency's denial of Medicaid benefits to the decedent's estate, concluding that because there were circumstances under which the trust could have made payments to her, it was an available resource.  The court rejects the estate's argument that the trust was not an available resource because the trustee had discretion to deny funds after she became disabled, finding that as long as payments "could be made" to the individual applying for benefits, the trust counted toward the resource limit.

Sarasota and Manatee County Florida residents should pay attention to the ruling as it may later be relied upon by a Florida court.

View more information from Marc J. Soss at http://www.fl-estateplanning.com/ and http://info.fl-estateplanning.com/

Marc Soss' practice focuses on estate and tax planning; probate and trust administration and litigation; guardianship law; and corporate law in Southwest Florida.  Marc is a frequent contributor to LISI and has published articles and been quoted in the Florida Bar, Rhode Island Bar, North Carolina Bar, Association of the United States Navy, Lawyers USA, Military.Com, Forbes.Com, and CNN Business. Marc also serves as an officer in the United States Naval Reserve.

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