The Ohio Supreme Court leaves Older Couples with Revocable Trusts in a Tricky Situation

Previously, in my post “Having a Home in a Living Trust can Effect Medicaid Eligibility,” http://www.perlalaw.com/blog/having-a-home-in-a-living-trust-can-effect-medicaid-eligibility/, I wrote about the appellate case of Atkinson v. Ohio Department of Job and Family Services in which the Court found that Job and Family Services could essentially penalize a married couple applying for Medicaid for having their home in a revocable Trust (also known as a living trust and family trust). For more details regarding the decision, see the link above.

The Ohio Supreme Court took up the case and issued a decision affirming the lower court’s ruling, putting to rest the revocable trust as a Medicaid planning tool for married couples. The Court held that using a trust to raise the CSRA is impermissible. The Court’s decision also made clear that for the time being, the ideal time to transfer real estate out of a trust and into the community spouse’s name is before the institutionalized spouse enters the facility (the snap-shot date). With a transfer prior to the snap-shot date, the home will be treated as an exempt resource, not affect the calculation of the CSRA, and there will not be an issue transferring the home to the community spouse.

The decision by the Ohio Supreme Court puts married couples facing possible long term care needs in a tricky situation, as it is advantageous to remove the home from a revocable trust prior to a spouse entering a long term care facility. But when a spouse will enter a long term care facility is not always known in advance. Strokes, falls and other unexpected events can always strike.

The best remedy for the time being is to develop a relationship with an elder law attorney who can provide guidance and keep you abreast of the law, as Medicaid law is always changing.