The Colorado Court of Appeals determines that the assets of a trust set up to hold a Medicaid recipient's elective share of her late husband's estate are available to pay for her care. In the Matter of the Estate of Faller (Colo. App., No. 01CA0110, July 18, 2002).
In 2000 Iris L. Fisher asked the probate court to establish an elective-share trust to benefit Ruby Faller, an incapacitated Medicaid recipient. Under such a trust, any award of assets to Mrs. Faller from her late husband's estate would be placed in trust. Ms. Fisher also requested that distributions from the trust be restricted to maintain Mrs. Faller's eligibility for Medicaid benefits. Mrs. Faller's elective-share trust was created pursuant to § 15-11-206(2). The probate court granted the petition, naming Ms. Fisher trustee, placing Mrs. Faller's elective share of $96,134 in the trust and directing that the assets "must be distributed in such a manner as to protect [surviving spouse''s] eligibility for Medicaid benefits." The court also ruled that the assets in the trust were not Mrs. Faller's property because the trust was funded with the her husband's property, and thus were not available to pay for the costs of her care.
The Colorado Department of Health Care Policy and Financing appealed, arguing that the trust assets are countable in determining Medicaid eligibility, and contending that the probate court erred in requiring that the trust be distributed so as to protect Mrs. Faller''s eligibility.
The Colorado Court of Appeals agrees with the Department and reverses. The court rules that an elective-share trust is not one of the three types of trusts'”income trusts, disability trusts and pooled trusts'”that the General Assembly established for the specific purpose of permitting public assistance recipients to maintain their eligibility. Thus, the court concludes that the court erred in attempting to shield the assets of the trust for the purpose of determining Mrs. Faller's Medicaid eligibility.
For the full text of this decision, go to: www.cobar.org/opinions/opinion.cfm?OpinionID=1649 .
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