A Massachusetts trial court rules that an irrevocable trust that contains a provision allowing the trustee to distribute the principal to others for the benefit of the beneficiary is not a countable resource for purposes of Medicaid eligibility. O'Leary v. Thorn (Mass. Super. Ct., No. WOCV2013-02013A, Sept. 18, 2014).
Alice O'Leary transferred assets to an irrevocable trust. The trust provided that she would receive income, but not the principal of the trust. The trust also contained a provision that allowed the trustee to apply any or all income or principal for the benefit of any beneficiary through agencies that the trustee deemed advisable. Mrs. O'Leary applied for Medicaid, and the state denied her benefits because it determined that the provision meant the trustee could make distributions to Mrs. O'Leary.
Mrs. O'Leary appealed, arguing the provision only permitted distributions to others on behalf of the beneficiaries. The state denied the appeal, ruling that the trust was a countable resource, and Mrs. O'Leary appealed to court.
The Massachusetts Superior Court holds that the trust is not a countable resource. According to the court, while the provision at question is ambiguous, reading the trust as a whole, the actual language of the trust clearly establishes that the trustee did not have discretion to distribute the principal to Mrs. O'Leary.
For the full text of this decision, go to: https://irrevocabletrust.files.wordpress.com/2014/09/wsc-decision-dtd-9-18-14-allowed-01574222.pdf
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