Many of our clients whom have created revocable trusts have “funded” their trusts with ownership of their real property. Transferring real estate to a revocable trust is one way to ensure a predictable, private, and efficient transfer of title to one’s family members upon death. Unfortunately, in recent years, ownership of one’s primary residence in a revocable trust created unintended eligibility problems for an Ohio Medicaid applicant. Happily, those unintended eligibility problems have now disappeared, due to a change the Ohio Department of Medicaid’s policies.
When a person applies for Medicaid, his resources are divided between those that are “countable” for eligibility purposes, and those that are “exempt.” Historically, a married couple’s primary residence was exempt if the residence was owned individually or jointly, or owned in a revocable trust. In recent years, however, Medicaid had taken the position that a primary residence loses its exempt status when transferred to a revocable trust, thereby requiring treatment of the house as a “countable” resource that was to be included in a married couple’s resource assessment calculation. Moreover, if the residence was transferred out of the revocable trust into an applicant’s individual name, the transfer would be deemed “improper” and negatively affect the applicant’s Medicaid eligibility.
On February 16, 2016, The Ohio Department of Medicaid issued Medicaid Eligibility Procedure Letters 107 & 108, creating a new policy for exempt resources placed into revocable trusts. The new procedure, effective immediately, directs that an “exempt resource placed into the individual’s or individual’s spouse revocable trust does not change the excludable nature of the resource”. In other words, if a resource is exempt under the Medicaid rules, it will remain exempt whether titled in the individual name of the applicant, applicant’s spouse, or held in a revocable trust for the benefit of one or both spouses. A subsequent transfer of an exempt asset from a revocable trust into one or both spouse’s individual names will not be considered an “improper transfer.”