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Important Medicaid Trust Rules Update: R.I. Court Rules That Pre-1993 Trust Is Countable Resource

By March 9, 2017December 21st, 2017Medicaid Planning and Gifting, News

Important Legal Update: Medicaid Trust Rules Machunis v. Rhode Island Dept. of Human Services (R.I., Super, No. PC 2016-0613, Jan. 9, 2017): 

A Rhode Island trial court affirms the denial of a nursing home resident’s application for Medicaid benefits based on excess resources, concluding that because a trust she established in 1991 allowed the trustee to make distributions of income and principal for her benefit, the entire trust was a countable resource.  

Nursing home resident Catherine T. Machunis applied to the Rhode Island Dept. of Human Services for Medicaid long-term care benefits. The agency denied the application because Ms. Machunis’ financial statement revealed that she was the beneficiary of a trust with a value of $78,149.57, exceeding Medicaid’s $4,000 asset limit.

Ms. Machunis requested a formal hearing, disputing the agency’s consideration of any money in the trust as a countable resource. Following an evidentiary hearing, a hearing officer determined that because Ms. Machunis had established the trust prior to August 1993, it was a Medicaid Qualifying Trust and the amount available to her was the maximum amount the trustee could distribute if the trustee used his or her full discretion under the trust’s terms. The hearing officer affirmed the denial of benefits, concluding that the trustee had the authority to disburse the entirety of the trust assets to Ms. Machunis and, therefore, the entire trust was a countable resource. Ms. Machunis appealed to the Superior Court of Rhode Island.

On appeal, Ms. Machunis argued that the trust assets were not countable resources for Medicaid purposes because the trustee’s discretion was limited to making distributions only from the income, and not from the principal, of the trust. The agency countered that the trustee had the discretion to make distributions from the principal for Ms. Machunis’ benefit and, therefore, the entire corpus of the trust was available to her.

The Superior Court of Rhode Island, Providence County, affirms the agency’s denial of Ms. Machunis’ application based on excess resources. The court finds that because the trust clearly
authorizes the trustee to make distributions from the income and principal for Ms. Machunis’ benefit, the entire trust is a countable resource and the agency properly denied her application.

For the full text of this decision, go to:

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Matthew J. Leonard, Esq. has devoted his practice to handling the legal needs of individuals and their business interests through all stages of life. As an attorney with the law firm of Salter McGowan Sylvia & Leonard, Inc., he has been engaged to handle matters from basic to sophisticated involving Estate Planning, Elder Law, Medicaid Planning, Probate, Trust and Estate Administration, Real Estate, Business Transactions, Business Creation and related litigation.