Are Irrevocable Trust Funds Countable for Purposes of Medicaid Eligibility?
Are irrevocable trusts considered countable assets when seniors are applying for community Medicaid?
It depends on the trust. In evaluating a trust, the first question is who created and funded it, the person applying for benefits, his or her spouse, or someone else. The rules are much more liberal if the trust was created by a third party rather than the applicant or his or her spouse. Assuming the applicant or spouse created and funded the trust, the funds are considered countable if the trustee has discretion to distribute them to the applicant. By contrast if it’s a third-party trust, the funds in trust are only countable if the trustee is required to distribute them. If distributions are discretionary, then the trust is not countable.
Many first-party trusts (those created by the Medicaid beneficiary or their spouse) created for Medicaid planning purposes dictate that the income be distributed to the grantor but that the principal assets may not be. In this case, the income would be considered available and countable, but the investments held by the trust would be protected.
An elder law attorney could review the trust and advise you specifically as well as let you know if there are any local applications of the law that would apply to the trust in question. Sometimes state Medicaid offices argue that funds in trust are available based on particular provisions in the trusts. You can find a local elder law attorney at www.elderlawanswers.com.