The Listen to Lawrence Letter: WARNING

About every six months, I am compelled to repeat a warning to all those clients and readers who have an irrevocable Medicaid trust. Too often, I see these trusts not work because the rules of the game are not followed. What are these rules? They are simple: Once the GRANTOR (you) transfers your assets to the trust, YOU CAN NOT GET THEM BACK. In other words, you cannot ask for the money back, and the TRUSTEE CAN NOT GIVE THE MONEY BACK TO YOU OR USE THE MONEY FOR YOUR BENEFIT.

REMEMBER: IF YOU CAN GET THE MONEY, MEDICAID CAN GET THE MONEY.

The trust is very clear. No part of the trust principal can be given to or spent on the Grantor. While some of these trusts allow the income (interest, dividends) to be so spent, most of our trusts do not. Check the trust before you touch the income.

The bottom line is that if the trustee spends one dime on your behalf contrary to the terms of the trust, then the trust no longer works for Medicaid protection purposes.

Keep in mind that the trustee can distribute to the trust beneficiaries (usually children and grandchildren), so the income and principal in the trust are not necessarily stuck in the trust.

I hope this helps.

And, if anyone you know would like to receive this

Listen to Lawrence Letter, just have them email me at

info@davidowlaw.com and I’ll add them to the list!

As always, please send me your questions. 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!