Skip to main content
A Better Partnership


Sep 2014
September 01, 2014

Estate Planning Tip: So Long Sole Benefit Trust?

The Michigan Department of Human Services has suddenly changed its policy with respect to trusts for the sole benefit of a spouse of a Medicaid applicant.  Prior to this change, a nursing home resident who was applying for Medicaid could transfer any excess assets into a trust for the sole benefit of a spouse living at home, get immediate Medicaid qualification and avoid the need to spend down assets on nursing home care.  DHS will now be treating these trusts as countable.  There was no law change that precipitated this change in policy.  DHS simply decided to apply existing law differently.  The legal reasoning behind the policy change is highly questionable.  DHS is essentially claiming that the nursing home resident has access to the trust assets even though, by definition, the sole beneficiary of the trust is the spouse of the nursing home resident.  Therefore, there is a significant probability that the denials that many Medicaid applicants are experiencing who established Sole Benefit Trusts will be overturned as contrary to current law.  However, those married couples who are currently facing a long term care admission will want to avoid the use of a Sole Benefit Trust until this mess is sorted out in litigation. 
Fortunately, there are other planning alternatives.  A married couple facing an immediate need for nursing home care can still obtain immediate Medicaid qualification for the ill spouse by using Medicaid compliant annuities or promissory notes.  If you have a client faced with an immediate need for nursing home care, I would be happy to consult with them on their options.   

NOTICE. Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you.

By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you.

Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.



+ -