Poor Drafting Leads to New York Court Holding Trust Assets as Available Resource

Poor Drafting Leads to New York Court Holding Trust Assets as Available Resource

Medicaid Asset Protection Trusts are a key planning strategy to protect assets and help qualify for long term care benefits so that a family is not impoverished from the excessive costs associated with nursing home care.  Here on Long Island, the cost of a nursing home can exceed $150,000/annually.  A recent New York Appeals Court ruling shows the importance of proper drafting and implementation of such a trust by an experienced elder law attorney.

In Flannery v. Zucker, decided on February 11, 2016, the Appellate Division ruled that a Medicaid applicant’s trust was an available countable resource because the trustees had discretion to make principal distributions to her. According to the court “because the principal of the trust may, in the discretion of [Ms. Flannery’s] children be paid for [Ms. Flannery’s] benefit” the principal of the trust is an available asset “despite the fact that her children refuse to exercise their discretion to make such payments of principal”.  Thus her application for Medicaid benefits was denied.

This case reiterates what we have already known and implemented on behalf of our clients – i.e, it is extremely important when drafting a Medicaid Asset Protection Trust, that the principal assets of the trust not be made available to the grantor of the trust.  Rather, the principal can be made available to lifetime beneficiaries chosen by the grantor, which usually includes the grantor’s children, who can then access the trust principal.

We welcome the opportunity to discuss this planning option with you, as well as others, to protect your assets and avoid becoming impoverished from the high costs associated with long term care.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.