In a previous post, http://www.perlalaw.com/blog/the-ohio-supreme-court-leaves-older-couples-with-revocable-trusts-in-a-tricky-situation/, I discussed the case of Atkinson v. Ohio Department of Job and Family Services. In that case, the Ohio Supreme confirmed that having a home in a revocable living trust was not only no longer a beneficial Medicaid planning tool for married couples but detrimental to married couples applying for Medicaid, as it created a trap for those wanting to transfer the home to the healthy spouse.
Thankfully, the Ohio Department of Medicaid issued a new policy regarding a home deeded in a revocable trust. Effective February 16, 2016, as long as the applicant or applicant’s spouse has authority to revoke or terminate the trust and use the trust for his support, a home deeded in a revocable trust is excluded as a resource. Further, transferring the home out of the trust into the name of the healthy spouse is not an improper transfer.
Why it Matters
Prior to this policy change, married couples facing possible long-term care costs were put in the difficult position of deciding whether to keep their home in a revocable living trust, a valuable estate planning tool often employed for probate avoidance, or whether to remove the home from the trust in order to avoid a possible penalty period for deeding the home into the name of the healthy spouse. Now, couples can comfortably maintain their home in a revocable living trust knowing that it will not negatively affect them in the event that a Medicaid application need be filed.
The Value of a Revocable Living Trust
Revocable Living Trusts have many potential estate planning benefits. Property properly deeded or titled in a trust will not go through probate, avoiding the significant cost and time of probate for heirs. A trust can provide creditor protection for heirs. A trust can delay distribution to heirs beyond your death for children or grandchildren who are too young to receive an inheritance or are not responsible with money. Trusts can be used to provide for disabled children or grandchildren without affecting their eligibility for government benefits. Trusts can also be used to provide for beloved pets.
For more information on Trusts and Medicaid Planning, contact a Cleveland Medicaid Planning Lawyer.