MEDICAID PLANNING - IRREVOCABLE ANNUITY TRUSTS Smith Bovill Fisher Meyer Et Al Attorneys Saginaw Michigan

Medicaid Planning - "Irrevocable Annuity Trusts"

An Irrevocable Annuity Trust might be a useful tool for certain clients for Medicaid planning. The Annuity Trust will allow a married couple to reduce "countable" assets which disqualify them from Medicaid eligibility by turning the asset into income for the spouse outside the nursing home ("Community Spouse"). The Trust will not jeopardize the ill spouse's eligibility for Medicaid and is not countable.

Once the "snap shot" has occurred and the Community Spouse Resource Allowance is determined, disqualifying excess assets can be placed into the Irrevocable Annuity Trust. This will allow immediate eligibility and immediate income for the Community Spouse. The Trust, however, is not revocable, even after the death of the ill spouse. Nor may it be revoked if the Community Spouse suddenly finds it necessary to go into a home themself. These trusts are carefully (and critically) scrutinized by the Michigan Department of Human Services.

Medicaid planners cannot take a "one-size-fits-all" approach, and an Irrevocable Annuity Trust is not the best approach for every married couple. This immediate stream of income may or may not be of benefit to the client. There may be other options for Medicaid planning that would be more appropriate. Many clients may simply not be comfortable with this approach after becoming fully informed of all of its ramifications.

It is important that qualified advisors counsel with the client about the benefits and disadvantages of this tool. It is equally important that all tools be discussed in deciding which is the best to use.

Smith Bovill, P.C., counsels clients on elder law and Medicaid planning issues regularly as part of its estate planning, probate, and trust administration practice. Please check our web site for any updates to the newsletter and additional information regarding elder law. This letter and the information on our web site is intended to be for informational purposes only. As a result of the constantly changing laws in the Medicaid area, the information provided may change. We would be pleased to discuss this, or any other Medicaid or elder law issues in more detail.

ANDREW D. RICHARDS
SMITH BOVILL, P.C

SHARON A. BURGESS
SMITH BOVILL, P.C.

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