Inter-vivos trusts are a planning tool that allows the elderly to qualify for Medicaid to remain in their own homes and avoid nursing home placement. Properly drafted, the assets within the trust are not counted as available by Medicaid. If the trust is not drafted properly the assets will be countable and the Medicaid application denied. An Appellate Division opinion, Flannery v. Zucker1 has upheld a decision by Medicaid that denied the application of Frances Flannery based upon specific language in her trust. She had brought an Article 78 proceeding to challenge Medicaid’s adverse determination.
According to the opinion, Frances Flannery executed a trust agreement, named her children as the co-trustees and granted them “the authority to distribute so much of the principal to [petitioner that they,] in their sole discretion, deem advisable to provide for [petitioner's] health, maintenance and welfare.” The children, as co-trustees, then exercised their discretion and refused to make the principal available to the petitioner.
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