September 9th, 2016
Q
My parents have an irrevocable trust that
contains land, money, and real property. It was set up as part of Medicaid
planning. If the trustees sell a part of the land, would it reset the five-year
look-back period? Also, does this land have to sell at "market" value
or can it sell to family at a discounted price? Finally, could this land simply
be gifted without resetting the five-year look-back period?
A
To start off, you need to check with a local
elder law attorney to be certain of the answers because different states
interpret the rules differently and it is important to see the actual wording
of the trust. That said, here are the probable answers: (1) The trust can sell
the land, but the proceeds of the sale must remain in the trust. (2) If the
trustees sell the land for less than its market value they may be violating
their fiduciary duty to the trust beneficiaries. But if the beneficiaries
approve of the sale, then the trustees could be protected from potential
liability. (3) The land could be gifted if the trust permits distributions to
the recipients in the proportions anticipated. This should not start a new
five-year clock (but this might be the most important issue to confirm with a
local elder law attorney). To find an attorney near you, go here: http://www.elderlawanswers.com/elder-law-attorneys.
For more about Medicaid and trusts, click here.
https://www.elderlawanswers.com/can-property-in-an-irrevocable-trust-be-sold-or-gifted-without-restarting-the-medicaid-look-back-period-15756
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