Will Trust Assets be Considered When Applying for Medicaid?

By Lara Schneider-Bomzer

The Connecticut Supreme Court decision, Pikula v. Department of Social Services, established clear guidelines for determining if a trust should be considered a “supplemental needs trust” or a “general support trust.”

In general, assets held in a supplemental needs trust are considered unavailable in determining Medicaid eligibility for the trust beneficiary.

The language of a supplemental needs trust states that the trust funds are specifically used to supplement the beneficiary’s needs beyond what Medicaid will cover.

Assets held in a general support trust are considered available and unprotected under the Medicaid regulations as the trust language often gives broad discretion to the Trustee to provide for the beneficiary’s general support and maintenance, which would include the cost of long-term care.

The good news is that the Pikula decision expanded on the concept of unavailability for Medicaid to include some trusts that were – prior to this decision – considered general support trusts.

What does this mean?

It means that such trusts may be protected for Medicaid purposes, thus ensuring Medicaid eligibility.

3 Important Factors

The court in Pikula looked at three overriding factors when determining if trust assets may be considered protected for the beneficiary:

• The Trustee’s discretion in making distributions of trust income and principal;
• The limitations on the Trustee within which the Trustee must operate; and
• The amount of trust assets as viewed within the context of the facts, such as the overall cost of long term care.

These 3 prongs are now crucial in determining whether trust assets are considered available within the context of Medicaid eligibility.

If you have an existing trust for a loved one who may need public benefits in the future, make sure that you meet with a qualified elder law attorney to review the trust in light of the landmark Pikula decision.

It could mean the difference between your loved one saving the trust assets for his or her benefit, or losing it all to long-term care costs.