I am routinely asked, and sometimes challenged ,about whether a person can be the trustee of their own irrevocable trust and still qualify for Medicaid. One cause for all of these questions is the number of lawyers who are not convinced that, and have never tried, making their clients Trustee of a properly drafted asset protection trust can be every bit as effective as a trust naming a son or daughter as the trustee.
Suffice it to say, a close reading of the cases on this issue reveals that the duty a trustee owes the beneficiaries of a trust does not shift depending on who the trustee is. Put another way, the Trustee owes the same duty to the beneficiaries, i.e. the duty defined in the Trust document, whether the Trustee is the person who created the trust or not. There are many nuances to the creation of a Trust that will allow the Trust Creator to be the Trustee and hold up, and they only become apparent to dedicated Elderlaw attorneys with open minds and a burning desire to give their clients the most flexible asset protection plans possible. Does that describe the attorney you’ve been talking to?
In any event, the United States Court of Appeals for the Second Circuit (New York’s stop en-route to the U.S. Supreme Court) recently issued a decision in a case that, while not directly on point, is very instructive. on this issue. The Second Circuit held that where a beneficiary could not compel a trustee to distribute assets for her benefit, the trust withstood the Medicaid Department’s claims that it was an available resource. Granted, in this case the beneficiary was not the trust creator, but the analysis is the same in that the case turned, correctly, on the fact that the trustee could not be forced to use trust funds for the benefit of the trust’s beneficiary. Simonsen v. Bremby (2d Cir., No. 16-204-cv, Feb. 15, 2017). The result is the same if the beneficiary also happens to be the Trust’s creator, assuming the trust is properly drafted.
The issue is subtle, and easily misconstrued by an uninformed attorney. Which leads me to this question. Does the attorney you’ve been asking about protecting your assets have the necessary depth of knowledge and skill to be trusted to handle your planning?
At Jeffrey P. Reisner, Esq., we focus on just this type of issue, and others like it and we are here to help you. To learn more about what we do and how we do it, call us in the Syracuse / Manlius/ Central New York area at (315) 422-6666. Remember, we keep you in control of your life, so you can leave your legacy, and have the peace of mind essential to allowing you to live your life to the fullest. We hope to see you soon!
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