By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney

Years ago, “Congress amended the Medicaid Act to create ‘trust rules’. These rules were written to close perceived loopholes in the Medicaid Eligibility laws; Because trusts frequently do not qualify as a resource under Medicaid rules, many individuals place their assets and money into trusts in order to circumvent the Medicaid Act’s resource limitation. Now, all trusts and trust-like devices are considered resources unless explicitly excluded by statute.” A trust-like device is defined as “a legal instrument, device or arrangement, which may not be called a trust under State law, but is similar to a trust.” It “must include: (1) a grantor (2) who transfers property (3) to an individual or entity with fiduciary obligations (a trustee) (4) “with the intention that it be held, managed or administered by the individual or entity for the benefit of the grantor or others.”

The amended Medicaid laws are intended to regulate agreements that, while not trusts per se, are similar to trusts. What the law looks at now is how the entity operates. If the entity’s purpose is to “take care of an applicant i.e. take care of all of mother/father’s bills, his/her debts, etc., it is similar to a trust, and the property transferred counts as an available resource for purposes of Medicaid eligibility.”

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.