[WSBAPT] Trusts to Protect assets from Medicaid liens

[Jim Doran]

Hello Interested Listmates:

I appreciate the responses to the email questions I had about setting up a
Trust to protect a clients' assets from the medicaid lien possibility.
Here are my deductions from the responses.  Please tell me if I am missing
something.

First, the use of an irrevocable trust would be necessary.  That means the
clients, trustors, would have to essentially divest their personal interest
in the assets.  They could not "change their minds" or demand funds from
the Trust or that an asset be sold and the income given to them.

Second, if I recall right, a person can only have $2,000 in their bank
account in order to qualify for Medicaid.  That would mean setting it all
up pretty close to the bone.  And, let's say that a trust allowed for the
Trustee to make small and incremental expenditures for the benefit of the
trustors.  The trustors would want to keep a bank balance under $2,000
which would mean pestering the Trustee for assistance.  the assistance
would be at the discretion of the Trustee.    This could become quite a
burden for the Trustee.  Additionally, who would be the Trustee is an
important question.  Whoever it is will essentially have control of all of
the assets put in the Trust.

Third, do the clients really expect to use Medicaid? The State approved
long term care providers are at the low end of the quality spectrum.  The
statistics show that most people do not need long term care and that those
who do usually need it for about 90 days.  These are statistics so they are
not solid.

Fourth, (I am not clear on this) the home is not subjected to the Medicaid
lien while there is a spouse living in the home.  Therefore this Medicaid
lien is only a concern upon the illness of the surviving spouse.

Fifth, the clients may very well want to sell a property or liquidate an
investment for their own enjoyment of life and they cannot do that with the
assets in the irrevocable trust.  Again, to expect a Trustee to sell an
asset and dole out some funds or good tot eh trustors on a monthly basis is
not realistic.

Finally, there are some tax consequences of having the assets in the
Trust.  I do not know what these are and would leave that to a tax
accountant.

My conclusion is that an Irrevocable Trust to protect assets from the
Medicaid lien is not appropriate if the clients have substantial assets
inreal estate and financial investments, especially of they have investment
income every month that they are living on.  It may be appropriate if a
client has very little assets, such as their own home, and only social
security and a small pension to live on month to month that will keep them
below the $2,000 per person minimum to qualify for Medicaid.

Did I get this right?

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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