Trust Is an Available Asset Because Trustees Have Discretion to Make Distributions

A New York appeals court rules that a Medicaid applicant's trust is an available asset because the trustees have discretion to make distributions to her. In the Matter of Frances Flannery v. Zucker (N.Y. Sup. Ct., App. Div., 4th Dept., No. TP 15-01033, Feb. 11, 2016).

Frances Flannery was the beneficiary of a trust that granted her children, as the trustees of the trust, the authority to distribute as much of the principal as they felt in their discretion was necessary to provide for Ms. Flannery's health and welfare. Ms. Flannery applied for Medicaid, and the state denied her benefits after determining the trust was an available asset.

Ms. Flannery appealed, arguing that the trust is not an available asset because her children refuse to make distributions of the principal to her. After a hearing, the state affirmed the denial of benefits, and Ms. Flannery appealed to court.

The New York Supreme Court, Appellate Division, affirms the denial of Medicaid benefits. According to the court, "because the principal of the trust may, in the discretion of [Ms. Flannery's] children be paid for [Ms. Flannery's] benefit," the principal of the trust is an available asset "despite the fact that her children refuse to exercise their discretion to make such payments of principal."

For the full text of this decision, go to: https://www.nycourts.gov/courts/ad4/Clerk/Decisions/2016/02-11-16/PDF/0066.pdf

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