Shalloway and Shalloway, P.A.

MEDICAID PLANNING AND TRUST MODIFICATION

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Medicaid Planning may require a trust modification to create or preserve the conditions of financial eligibility. For example, a person who is a trust beneficiary and Medicaid recipient might need to be divested of their interest to avoid a gift exceeding their asset cap. While any proposed trust modification must be weighed carefully and considered on a case by case basis, either of the below strategies may be effective.

Preserving family harmony is always a chief concern when engaging in Medicaid planning. Therefore, trust modification may be best if all the parties can agree. Modification or termination of a no charitable irrevocable trust may be accomplished with a consent modification document if the trust grantor and all of its potential beneficiaries can agree. The grantor and beneficiaries may agree to take any action with respect to the trust’s terms – even if that action is oppositional to the trust’s purpose. Such straightforward modification is permissible regardless of the proposed changes or the number of beneficiaries involved.

When the grantor cannot, or will not, consent to action proposed by all of the beneficiaries, the court may allow such trust modification or termination. While such an action is necessarily more involved than a consent modification, it is a straightforward and relatively short procedure. Here, all of the beneficiaries, petition the court to approve their proposed action. Unlike a consent modification, however, a court-approved modification or termination generally may not frustrate a “material purpose” of the trust. Nonetheless, the court may allow a modification or termination that is inconsistent with a material purpose of the trust if the reason for such modification or termination “substantially outweighs” accomplishment of the material purpose.

To learn more about trust modification and how it fits into an overall Medicaid Planning strategy, please contact Shalloway and Shalloway, P.A.

Shalloway & Shalloway, P.A., is located in West Palm Beach, FL and serves clients in Palm Beach, Broward, Dade, Okeechobee, Martin and St. Lucie Counties.

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