Often our clients come to see us to discuss their options for protecting their primary residence should they ever require long-term care in a nursing home.  The conversation usually involves a discussion about the pros and cons of a transaction which would protect the home from the placement or collection of a MassHealth lien.  As elder law attorneys, we’ve always had a few different tools in our toolbox which would fix the problem of the dreaded MassHealth lien.  Whether it was an irrevocable trust, a life estate deed or some other arrangement, there was a fix.

For the last two or three years, the previously well-settled law surrounding irrevocable income only trusts has been under fire by the Office of Medicaid.  Although there has been no regulation change or even a court decision carrying true precedential value, the agency has revamped its criteria for reviewing irrevocable income only trusts for individuals applying for nursing home MassHealth benefits.  The review standards seem to change daily and the pattern is unnerving—MassHealth denies a trust containing certain provisions one day and approves an identical trust the next.  Even worse, the superior courts, historically thought to be a place of refuge from unfair agency decisions, have yet to provide clarification or consistency.  Here’s an example—in September 2014, two cases were heard by the exact same superior court judge in Worcester County.  The cases were based on the exact same trust and denied by the MassHealth agency for the exact same reasons.  The decisions—opposite!  In one case the family home was safe and the elder received MassHealth benefits and the other, Roche V. Thorn, is currently on the Massachusetts Appeals Court‘s docket.  You couldn’t even write this stuff for an episode of Law & Order!  As a result, the current climate makes it very challenging (if not impossible) to effectively prepare these instruments and assure our clients that they will actually be a good fix to the problem of the lien.

So far 2016 does not bring with it any more knowledge or insight into the treatment of irrevocable income only trusts.  Late last year, the superior courts handed down the Daley and Nadeau decisions on December 24 and 29, respectively.  Both decisions focused on the grantors’ ability to make use of the property held within the trust during their lifetime, although they came at the problem from two different vantage points—one attacking irrevocable trust provisions and the other eluding to the fact that life estate deeds may be problematic (but that’s a whole other blog post!).  With the Roche case pending at the Massachusetts Appeal Court and oral argument scheduled for next month, perhaps we will see some clarity later in the year.

For now, we sit in the shop, dusting off some old, less effective tools until we have more information about the future of irrevocable trusts (and, I suppose life estate deeds) in the MassHealth context.  Stay tuned and please feel free to give us a call to discuss your personal concerns regarding your irrevocable trust!

February 2016