Medicaid: Sole Benefit Trust rejected and transfer penalty imposed

Sole Benefit Trust rejected and transfer penalty imposed. An 86 year old applicant established an irrevocable trust for the benefit of his 64 year old daughter. However, the trust was not submitted to DCH Legal for approval and Petitioner submitted no evidence that the trust comported with Section 2346  relating to special needs trusts. Further, the trust language was ambiguous regarding whether it was for the disabled daughter’s sole benefit since page four provided for reimbursement to the State for benefits paid on behalf of both Grantor and the Beneficiary. Imposition of the transfer penalty was upheld since Petitioner did not rebut the presumption that the transfer was for the sole purpose of qualifying for Medicaid. To the extent this application was denied because Petitioner did not send the trust to DCH Legal, this decision is incorrect. Section 2346 currently provides (and with minor changed so provided at the time of the decision) that for “applications pending on or after April 1, 2005, send a copy of the SNT to DCH Legal Services Section, along with proof of disability, prior to approval of the case. Use the routing form in Appendix F, entitled “Special Needs Trust Review Routing Form”. Some attorneys may submit SNTs to DCH prior to the application at DFCS. Obtain copies of the submission to DCH and its determination. If not, submit SNT upon receipt during application process. Submit the same documents that are required above.” Thus, it was the caseworker’s responsibility to forward the trust to DCH Legal, not the Petitioner’s responsibility. Of course, the question also exists: where was the lawyer who drafted the trust and why didn’t he or she submit the trust for approval? And why he or she didn’t appear at the hearing? Also, if the trust included trust protector provisions allowing for modification to comply with Medicaid eligibility rules, why didn’t the drafting lawyer remove the payback provision for the grantor’s benefits? Otherwise, it appears as though the trust may have complied with the  CMS Letter from Ginna Hain to Mary O’Byrne, dated June 27, 2005.

OSAH-Hall-Langston-2-2009.pdf (February 6, 2009).