Michigan Department of Human Services Changes Stance on "Solely for the Benefit of" Trusts

September 11, 2014

Medicaid planning and elder law attorneys in the State of Michigan have long used a technique known as a “Solely for the Benefit Of” (or SBO) Trust to help married couples qualify for Medicaid assistance when one spouse needs nursing home care. The SBO Trust allowed one spouse to qualify for Medicaid assistance without impoverishing the spouse who remained at home.

Within the last few weeks, the Michigan Department of Human Services has changed its stance on SBO Trusts. Without any change in the law, or administrative rules, the Department of Human Services now refuses to recognize the SBO Trust as an effective planning technique. Whereas assets transferred to an SBO Trust were previously not “countable” for purposes of determining whether a person met Medicaid asset limits, the new DHS position is that all assets transferred to the SBO Trust count toward the asset limit.

This is a significant and unforeseen change in the Medicaid planning landscape. The SBO Trust, until now, has been the preferred method to assist married couples with Medicaid qualification for one spouse. Now more than ever it is important for people facing long term care, and the prospect of applying for Medicaid assistance, to seek qualified legal advice to help them with this process.

 

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