[WSBAPT] Trusts to Protect Assets from Medicaid

Tue Nov 17 11:43:18 PST 2015

I think the idea is to not put income producing assets into the trust.
However, if there are three pieces of real estate with homes, they would
probably want to lease them out for income.  However, lets assume that this
is not an issue or we can deal with that.

The idea is to protect the real estate from any Medicaid lien by putting
the real estate into the irrevocable trust.

The assets that are not put into the trust will have to be dealt with inter
vivos or by a Will for each, H & W.  It may be that the assets kept out of
the trust by H & W will prevent them from qualifying for Medicaid.  But
that is an issue for their ongoing financial management.

I am interested in the "life estate problem" and what the solution to that
might be; a tenancy of some sort granted by the Trustee???

Thank you.

Jim

James R. Doran
Attorney at Law
100 E. Pine Street -  Suite 205
Bellingham, WA 98225
(360)393-9506
jim at doranlegal.com
www.doranlegal.com

On Tue, Nov 17, 2015 at 11:22 AM, Martin Silver <msilver at wolfenet.com>
wrote:

> One problem I see is that, all things being equal and favorable to the
> grantors, the trust income tax rate is so high that income has to be
> distributed out which may not be desirable.  Thus,  if there are income
> producing assets and the grantors are reporting the income but not drawing
> it down (ie, leaving it in the trust to accumulate) you have a situation
> where there is at a minimum an annual gift back, and therefore, a future
> commingling issue.  I suppose grantors can draw it down and gift it to
> another family member who can contribute it, but that is cumbersome.  I
> suppose that the trust can also distribute income to other named family
> beneficiaries who gift it to the primary parental beneficiaries, but this
> too is cumbersome.
>
> *From:* Jim Doran <jim at doranlegal.com>
> *Sent:* Tuesday, November 17, 2015 10:53 AM
> *To:* WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
> *Subject:* Re: [WSBAPT] Trusts to Protect Assets from Medicaid
>
> Thank you, Krista.  I will get in touch with David if I do not get much
> feedback here.  I am sure there are lots of nuances like the "life estate"
> issue that I will learn about as we go.
>
> Jim
>
> James R. Doran
> Attorney at Law
> 100 E. Pine Street -  Suite 205
> Bellingham, WA 98225
> (360)393-9506
> jim at doranlegal.com
> www.doranlegal.com
>
> On Tue, Nov 17, 2015 at 10:41 AM, Krista MacLaren <kjm.inc at mac.com> wrote:
>
>> Hi Jim,
>>
>> I was just at an NBI Elder Law CLE on this topic last Friday, and one of
>> the very informed speakers said at some point, don’t use life estates.
>> Unfortunately I don’t know exactly what he was saying, because I had missed
>> much of the day’s speakers and wasn’t following the discussion very well.
>> If folks on the list don’t have the answer, you could check with David
>> Kazemba in Wenatchee, the speaker.
>>
>>
>> Krista J. MacLaren
>> Attorney at Law
>> Northgate Executive Center II
>> 9725 3rd Ave NE, Suite 600
>> Seattle, WA 98115
>> (206)523-6116
>> kjm.inc at mac.com
>>
>> Please note, as with most email providers, Mac does not encrypt email
>> messages.  Accordingly, the confidentiality of messages sent to this
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>> error, please honor the privacy of the intended recipient: reply to the
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>>
>>
>> On Nov 17, 2015, at 10:22 AM, Jim Doran <jim at DORANLEGAL.COM
>> <jim at doranlegal.com>> wrote:
>>
>> Hello Listmates:
>>
>> I know this is a common question and I also know that there is tension in
>> the law regarding how and even "if" this can be done.  I have a client that
>> is asking the question in a pretty straightforward manner.  I think this
>> issue goes to the lack of progress in our society concerning health care
>> and dying.
>>
>> H & W, both in their early 70s, want to put their significant assets, two
>> pieces of real estate and probably a third very valuable one that they will
>> receive as an inheritance from mother, into a trust to protect them from
>> the Medicaid asset requirements for eligibility and from the spend-down and
>> recoupment provisions of medicaid.  I would imagine the protection from
>> creditors in general is also part of the concept.
>>
>> The concept is to put the assets into an irrevocable trust that gives
>> them a life estate in the property they choose to live in.  The trust would
>> direct that the remainder at the death of the second trustor would go to
>> the children in a typical scheme.  H & W would keep some assets, such as
>> investment funds and some cash and regular monthly income, out of the trust
>> to live on.  Those assets would not be protected.
>>
>> One question for them is, who will be the Trustee?  This is an
>> irrevocable trust so you better choose wisely.
>>
>> For me, the question is whether this can be done at all and how it can be
>> done.  I am aware of the five year look-back provisions so we want to do
>> this asap.
>>
>> I do have access to the desk books and other library sources.  If someone
>> can point me in the right direction, give me the right name for this kind
>> of trust, or send me a model, it would be appreciated.
>>
>> Jim Doran
>>
>>
>> James R. Doran
>> Attorney at Law
>> 100 E. Pine Street -  Suite 205
>> Bellingham, WA 98225
>> (360)393-9506
>> jim at doranlegal.com
>> www.doranlegal.com
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