[WSBAPT] Trusts to Protect assets from Medicaid liens

[Lewis, Amy C.]

Jim,

                I would add a couple of clarifications to your points below.  The $2,000 asset limit for Medicaid qualification is applicable only to a single individual or to each member of a couple if they are both applying for Medicaid.  If only one spouse is applying for Medicaid, the spouse not applying can have a minimum of $54,726 in “non-exempt assets.”  This amount can be increased in some circumstances, with a maximum of $119,200.  I have attached “Questions and Answers on Medicaid for Nursing Home Residents,” which has more information on this.

                It’s not necessarily the case that Medicaid funded care is in a less attractive facility, but it may depend on timing.  Many of the higher end facilities will accept Medicaid payment, but not if you enter the facility as a Medicaid recipient on day 1.  Many of the better facilities require that you be able to self-pay for 1-2 years at the higher private pay rate before switching to Medicaid.

                I agree with the comments of others that you should consider partnering with someone who regularly practices in the Medicaid context.


Amy C. Lewis, Attorney

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jim Doran
Sent: Wednesday, November 18, 2015 1:10 PM
To: Real Property Section
Subject: [WSBAPT] Trusts to Protect assets from Medicaid liens

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<mailto:jim at doranlegal.com>
www.doranlegal.com<http://www.doranlegal.com>

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