Medicaid Trust New York

Medicaid Trust New York

Share This Post:

What is Medicaid Trust?

Medicaid trust is a powerful estate planning tool employed by adults for the protection of their assets. As one of the few irrevocable trusts available, the Medicaid trust New York allows you to leave your property in the hands of another (your trustee), while giving them instructions on how to manage that property. You could make your adult child or other close and trusted relative your trustee, but never yourself nor your spouse. In New York, having a Medicaid trust qualifies you for Medicaid benefits but you cannot be a direct beneficiary of the trust.

Medicaid trust New York is a great form of asset protection for New Yorkers who seek to avoid the huge costs associated with long-term care. But a failure to properly administer the Medicaid trust could result to bad bloods and bitter family feuds resulting in serious financial repercussions. This is well explained by the Suffolk County Surrogate’s Court case of September 7, 2017 in Matter of The Schweiger Family 2013 Irrevocable Trust.

In year 2013, William Schweiger, a widower, created an irrevocable Medicaid trust in order to financially qualify for Medicaid, funding the trust with a bank account and money he got from the sale of his house. He stated in the trust that at his death, his five children will get equal portions of the property in the trust. He named two of these five as co-trustees to manage the trust property.

But two problems arose shortly afterwards. The two daughters used money gotten from the trust property to pay for Schweiger’s personal and health care, despite the fact that the owner of the trust (Schweiger) was not authorized to deliberately benefit from the trust. Also, they both distributed the assets to themselves alone without including the other three siblings, of which the trust mandated them to distribute equally.

When the other siblings realized, they filed a suit against the co-trustees to court and easily won over $130,000, simply because the co-trustees acted against the terms of the trust.

Consider your options before opting for a Medicaid trust New York

Setting up a Medicaid trust New York is quite a delicate affair. The terms must be strictly adhered to by the co-trustees as well as the creator of the trust. You creating a Medicaid trust automatically prevents you from directly benefiting from the trust money, and as such, you may be putting yourself in a conflict situation with whoever you’re appointing to manage it for you. From the Schweiger case, before creating the trust, did he ensure he had another means of income with which to fund his personal and health care needs before obtaining Medicaid benefits? If not, was it legally established that the trust would cover those expenses? If so, could it have been done without compromising the trust and putting the co-trustees under pressure? These among others are issues which must be well looked into before opting for a Medicaid trust. It’s advisable you consult an Elder Lawyer in New York to guide you in establishing your Medicaid trust New York.

Trusts, as the name implies, demands a high level of trustworthiness and accountability from the trustees. In New York, while a trustee can also be a beneficiary of the Medicaid trust New York, the trustee is never permitted to place his or her own interests foremost above others even if the grantor (creator of the trust) later calls for it. And the trustee must never for any reason make distributions to themselves without involving all affected parties in the trust (as the two co-trustees did).

Had the man held on to his wealth, using his own money to care for him wouldn’t have incurred any negative consequences. But so long he had created a trust, it became a civil wrong to use his own money.

Therefore, before hurrying to create a Medicaid trust New York, ensure you speak with an Elder lawyer who not only has the basic knowledge of estate planning, but also has acquired great experience and insight in foreseeing possible future occurrence and knowing how best to counter or avoid such nuances. Or have you been named as a trustee? Before carrying out any management role, take good look at the terms of agreement and consult an attorney to guide you through in order to prevent you from falling into unseen pits.

to schedule a consultation today.
Please reach out to us at:

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

Got a Problem? Consult With Us

For Assistance, Please Give us a call or schedule a virtual appointment.