Asset Protection Trust Survives Court Challenge and Protects Assets From Medicaid/Nursing Home Spend-down

At the Elder Care firm, one of our main tools that we use to protect our client’s assets is the Castle Trust. The Castle Trust not only avoids probate, but it also can protect the beneficiaries from divorces and creditors, and most importantly, provide asset protection for the trust makers from lawsuits and long-term care costs, including protecting assets from a Medicaid spend down.

We often get asked if the Castle Trust has ever been challenged at court and whether the court ruled that the assets in the Trust are truly protected against a Medicaid spend down. The answer to both of those questions is yes.

Just recently, another case opinion has been released upholding the validity of Asset Protection Trusts. The case was Heyn v. Director of the Office of Medicaid, 2016 WL 1466564 (April 15, 2016). The Massachusetts Appellate Court ruled that a person’s assets contained within an Asset Protection Trust (like the Castle Trust), were not considered as counted assets for Medicaid purposes; therefore, they were protected and did not have to be spent down (a single person applying for Medicaid is allowed only $2,000 in total countable assets). The Heyn case goes down as another victory for Asset Protection Trust!

The person involved in this case was Everlenna Roche. Ms. Roche lived in a nursing home from November 4, 2011 until her death on August 25, 2013. Upon entered the nursing home, Ms. Roche applied for and was approved for Medicaid; meaning, Medicaid would pay for Ms. Roche’s nursing home bill. However, on March 27, 2013, the state of Massachusetts ended her coverage due the fact that Ms. Roche had assets in an Asset Protection Trust that she created in 2003 (beyond the 5-year look-back). The Elder Law Attorneys at the Elder Care Firm disagreed with this decision and so did the Appellate Court. Ms. Roche’s Trust was upheld, the assets in the Trust were not considered countable assets, and her Medicaid eligibility was reinstated.

More People are Using Asset Protection Trusts

More of our clients are now using Asset Protection Trusts, such as the Castle Trust, because of the rising costs of long-term care. Clients do not want to get in the situation where they must lose everything because they end up in a nursing home that costs $12,000 per month. A standardrevocable living trustdoes not provide asset protection against long-term care costs. And just as the recent Heyn case proves, if the assets are put in the Castle Trust 5 years before the client enters a nursing home and applies for Medicaid, they are protected and not counted as an asset for Medicaid purposes.

Learn More About the Castle Trust

If you like to learn more about a Castle Trust I recommend you attend one of our upcoming life care planning workshops where we go over the differences between a Castle Trust and revocable trust.

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