Cohen v. Commissioner

668 N.E.2d 769 (1996)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

In each of these cases, the grantor of an irrevocable trust, of which the grantor (or spouse) is a beneficiary and to which the grantor has transferred substantial assets, claims eligibility for Medicaid assistance because the trust, while according the trustee substantial discretion in a number of respects, explicitly seeks to deny the trustee any discretion to make any sums available to the grantor if such availability would render the grantor ineligible for public assistance. These trusts seek to limit the trustees' discretion just insofar as the exercise of that discretion may make the grantor ineligible for public assistance. The consequence of holding these persons ineligible has been to require them to spend down the resources in their trusts. Several Court decisions have addressed the issue all ruling that the trust assets are available to the grantors, thereby rendering them ineligible for Medicaid assistance to the extent of such assets. Ps reason that, under the terms of the trusts, there is no discretion to pay monies that would make the grantors ineligible for assistance under the program, and that therefore the trust’s assets are not available to the beneficiaries. D argues that trusts of the sort in issue do not get trust assets or income out from under the terms of the MOT statute since the purpose of the statute is to identify when, because of trustee discretion, trust assets are available to the beneficiary, while the terms of the trusts assume eligibility and define discretion so as not to disturb it. To allow such a device, would 'allow grantors of trusts to make their own Medicaid eligibility rules.'