Assets in Irrevocable Trust Created by Children are Available Assets to Medicaid Applicant

Lucille Hedlund transferred almost all of her assets to her children in June 1991. Her children then transferred the assets to an irrevocable trust for Hedlund’s benefit on the same day. Hedlune entered a nursing home and applied for Medicaid benefits in June of 2008, and the state denied her benefits after determining that the trust assets were available assets under state law. Hedlund appealed the denial and argued that the trust was not funded with her assets since she had transferred the assets to her children.

In Hedlund v. Wisconsin Dept. of Health Services (Wis. Ct. App., No. 2010AP3070, Oct. 13, 2011), the Wisconsin Court of Appeals held that the trust assets were available assets. Under state law, trust assets are available to an applicant if the trust was funded with the applicant’s assets and if the applicant directed the formation of the trust. The court determined that Hedlund’s children used Hedlund’s assets to fund the trust at Hedlund’s direction because the children put the transferred assets in the trust the same day Hedlund transferred the assets to them.

See Irrevocable Trust Set Up by Medicaid Applicant’s Children is Available Asset, ElderLawAnswers, Oct. 14, 2011.