My parents have an irrevocable trust that contains land, money, and real property. It was set up as part of Medicaid planning. If the trustees sell a part of the land, would it reset the five-year look-back period? Also, does this land have to sell at "market" value or can it sell to family at a discounted price? Finally, could this land simply be gifted without resetting the five-year look-back period?
To start off, you need to check with our office to be certain of the answers because the rules can be interpreted differently so it is important to see the actual wording of the trust. That said, here are the probable answers: (1) The trust can sell the land, but the proceeds of the sale must remain in the trust. (2) If the trustees sell the land for less than its market value they may be violating their fiduciary duty to the trust beneficiaries. But if the beneficiaries approve of the sale, then the trustees could be protected from potential liability. (3) The land could be gifted if the trust permits distributions to the recipients in the proportions anticipated. This should not start a new five-year clock (but this might be the most important issue to confirm with our office). Please call Grosskopf Law Office, LLC and schedule an appointment to have your documents reviewed. We can provide the best options for your specific situation.
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