[WSBAPT] Trusts and Friend-Educated Clients

[Jane Bitz]

In law school on the first day of Income Tax class, my professor (who was Kit Querna, a wonderful attorney in Spokane who has since passed away) wrote the "first rule of tax" on the board in capital letters: PIGS GET SLAUGHTERED

Elder Law attorney answer:
No "trust for all assets" is needed IF they are talking about health insurance coverage only and not "institutional Medicaid" for long term care.


IF they are talking about medical insurance. They can apply for Obama Care (Medicaid medical benefits) and their assets are not counted toward eligibility, just income.

Example: I have a client who was always low income, but inherited a nice amount (about $200K) from her mom's estate. The money was invested and she applied for and receives medical insurance through the Washington "exchange". Her provider is Molina and she pays no premiums because she is "low income" - only the interest, dividends and capital gain on her investments are counted for eligibility for "Obama Care" insurance coverage. She takes a monthly draw from her inheritance fund as her income.

Your clients probably have so much in passive income that they will end up with paying a premium for their coverage.

As Diane said: some people believe or are told that they can transfer assets into an irrevocable MAPT (Medicaid Asset Protection Trust) and then later qualify for Medicaid assistance in paying for long term care (assisted living, memory care, nursing home, etc.). The problem is that there is a 5 year look back on gifting. If they need care before 5 years have passed, there is a gifting "penalty" that is applied forward, from the date of the application.

In addition, many facilities are requiring 24 to 36 months of private pay before Medicaid can become a payment source because Medicaid reimbursement rates have not kept up with costs at those facilities. The facilities also limit the number of "Medicaid beds" because of this issue.

Jane.
Jane G. Bitz
Of Counsel
Wolff, Hislop & Crockett, PLLC
12209 E. Mission Ave, Suite 5
Spokane Valley, WA 99206-4824
(509) 927-9700 x126
FAX: (509) 777-1800


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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Paul Neumiller
Sent: Thursday, July 27, 2023 1:53 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Trusts and Friend-Educated Clients

By the way, the couple is healthy, happy, and in their mid-50s.  Estate size of around $5 million.


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From: Paul Neumiller
Sent: Thursday, July 27, 2023 12:55 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Trusts and Friend-Educated Clients

This was a new one for me so I thought I'd bounce it off the hive-mind.  New estate planning clients have insisted they need a WA trust because the trust would make their Obama Care expenses free.  They say that their "good and very knowledgeable" friends told them that they set up a WA trust and now they qualify to get all medical expenses for free.  Any ideas?


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