My February 2016 blog post gave a bleak outlook across the battlefield of irrevocable income only trusts in a Medicaid context—it’s guerrilla warfare out there, there are no rules, and the Superior Court and fair hearing decisions are all over the map making it very difficult to advise seniors who want to protect their home from the high cost of long-term care. But on April 15, 2016, a significant battle was won and there was finally some good news.  Actually, some really good news.

Heyn vs. Director of the Office of Medicaid (formerly known as the Roche case) was overturned by the Massachusetts Appeals Court, the second highest court in the Commonwealth.  Eligibility for Medicaid benefits was initially denied by the Office of Medicaid, Board of Hearings and Worcester County Superior Court, each maintaining that the assets held in Everlenna Roche’s irrevocable trust were countable because the trust contained certain problematic provisions.  For the most part, these were innocuous provisions that have been historically acceptable.  MassNAELA submitted an amicus curiae brief in support of the applicant’s position that the trust was noncountable and the provisions in question did not make the trust principal available to Mrs. Roche.  The Appeals Court decision came down in favor of the applicant, thus overturning the prior denials—a significant victory for Massachusetts seniors.

So what does the Heyn case mean for the future of irrevocable income only trusts? First, as mentioned above, while exciting, this is merely a battle victory and unfortunately the war wages on across the Commonwealth.  Every day, irrevocable trusts are denied for random, narrow, misconstrued provisions and clauses.  Second, the Commonwealth may file an appeal with the Supreme Judicial Court (SJC) challenging the Heyn decision.  If it does, and if the SJC hears the case and agrees with the Medicaid agency, this will sound the death knell for the use of some types of irrevocable trusts for long-term care planning and protection.  So, the verdict is still out. In the meantime, perhaps (fingers crossed), the decision will begin to have positive effects on the lower court and fair hearing decisions that are pending.  Time will tell as it will take several months before we start to see the implications of the Heyn decision beyond its own facts.  For now, more waiting, more uncertainty…

If you would like to read the Heyn decision, click here.  And if you would like to discuss your own trust or estate plan, please call or email Jennifer Poles at 781/461-1020 or poles@ssbllc.come to schedule an appointment.

May 2016