The Listen to Lawrence Letter: Does decanting a Medicaid trust restart the five-year lookback?

DOES DECANTING A MEDICAID TRUST RESTART THE

FIVE-YEAR LOOKBACK?

CLIENT QUESTION:

Will decanting a Medicaid Trust start the five-year lookback again? And if a house has already been deeded to the trustee of the original trust, must there be a new deed to the decanted trust?

MY RESPONSE:

Generally, no. They only get one bite at the apple.

Decanting is essentially pouring the assets from one trust into another, much like decanting a bottle of wine into, well, a decanter.

When properly done, decanting an existing Medicaid Asset Protection Trust should not restart the five-year Medicaid lookback. The original transfer into the trust started the clock. Moving those assets into the new decanted trust does not ordinarily start a new five-year period.

But remember, you are creating a new trust. The assets held by the old trust must be retitled into the new trust. That includes real estate. If your house was deeded to the trustee of the original trust, a new deed should be prepared transferring the property from the old trust to the new decanted trust.

The same concept applies to bank and investment accounts. They need to be properly retitled so that the new trust actually owns the assets.

Decanting can be an extremely useful tool when an older irrevocable Medicaid trust needs to be updated without giving up the protection already earned under the five-year lookback.

And, if anyone you know would like to

receive this Listen to Lawrence Letter just

tell them to send their email address to info@davidowlaw.com and I’ll add them to the list!

As always, please send your questions in! If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected. Stay safe!