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No transfer penalty because gift to trust was 36 month look-back applied and it had expired

Hazel Wilson and her husband executed and funded a revocable living trust in 1991. The trust became irrevocable at her husband’s death in 1998, forming an A/B trust. Hazel had access to the principal and income from trust A, but only the income from trust B. In 1999, Hazel transferred $636,638 in property to her sons. In January 2003, Hazel applied for Medicaid. The State denied her application based on the transfer of assets. The State argued that a 60 month look-back applied and, therefore, the 1999 transfer was disqualifying. The court rejected the Department’s argument that the 60 month look-back applied due to the transfer being from a trust and rejected the applicant’s argument that a 30 month look-back applied since the trust was created prior to the 1993 amendments to the Medicaid statute. Instead, the Court found that the trust provides that Hazel receives distributions and, therefore, any payments were first made to her and then distributed to others. For that reason, the 36 month look-back applied, which had expired prior to the time of her application.

Wilson v. Neb. HHS, 718 N.W.2d 544 (Neb. 2006)

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