Irrevocable Trusts Need The Attention of an Experienced Oklahoma Attorney
Trusts of all sorts are valuable estate planning tools. For older adults, an Oklahoma Irrevocable Trust can provide often-needed financial protection and stability. Knowing its uses and limitations can help you decide if an irrevocable trust is right for you and your circumstances. This article is an introduction to irrevocable trusts. For all your estate planning needs, consult with an experienced Oklahoma Trust attorney in your area.
Irrevocable Trusts: The Basics
An irrevocable trust is a type of trust that, once established, generally cannot be altered, amended, or revoked without the consent of the beneficiaries. In Oklahoma, as in many other states, irrevocable trusts are governed by state law.
Irrevocable trusts in Oklahoma are typically created by a written document that complies with the legal requirements for trust creation. These documents are quite technical and have long-term and short-term implications for finances and taxes. Always work with an experienced Oklahoma Irrevocable Trust Attorney to draft and execute these important documents.
Irrevocable Trusts and the Medicaid Clawback
One of the advantages of an irrevocable trust is that it may offer some level of protection against creditors. Once assets are transferred into an irrevocable trust, they are often considered separate from the settlor’s personal assets and may be shielded from certain creditors.
Medicaid is often one such creditor. Medicaid can seek to take back or “clawback” assets from an elder’s estate either before death or after death. However, this happens most often after death. This is how this scenario often arises. An elder in need of long-term care applies to Medicaid to cover a portion of the costs incurred. Once the elder has passed away, Medicaid will seek to recover or clawback the funds paid out from the elder’s estate. This is often called Medicaid estate recovery.
While Medicaid can clawback some assets, not all assets are reachable by Medicaid. In general, if an asset is not available to a Medicaid beneficiary during their lifetime, it will not be subject to clawback upon their death. Assets held in an irrevocable trust may only be subject to clawback by Medicaid if the trustee is required to allocate income back to the deceased’s estate or fulfill unpaid claims.
The Nitty Gritty
In general, if a deceased Medicaid beneficiary had control over property while alive, that property is then subject to Medicaid clawback, regardless of whether it is in an Oklahoma irrevocable trust. Even assets that are not counted when determining Medicaid eligibility can be subject to clawback once the Medicaid beneficiary dies.
There are however, certain circumstances on which assets may not be clawed back. These circumstances include:
- The deceased has a living spouse, regardless of their location.
- The deceased has a surviving minor child (under 21), or a child who is blind or disabled, regardless of their residence.
- A sibling lived in the home for at least a year before the deceased was placed in an institution, and the sibling continues to live in the house with some equity interest.
- The deceased lived with an adult child who served as a caregiver, delaying institutionalization, and the child resided in the home for at least two years before the parent’s nursing home admission.
Other Circumstances
Additionally, there are circumstances in which a court may prohibit the clawback. If heirs can demonstrate undue hardship, such as relying solely on the estate for income, the state may waive recovery. Oklahoma courts also take into consideration situations in which small family farms and businesses generate limited income.
In all cases, the state must notify heirs of its intention to recover Medicaid costs. This is meant to allow heirs the opportunity to claim an exemption. Recovery may also be waived if the state deems the collection process unduly expensive. If you as an heir have received such notice, it is imperative that you contact an experienced Oklahoma Trust attorney as soon as possible to determine a course of action.
Finally, the law limits the amount of Medicaid cost recovery in Oklahoma where the recipient was 55 or older and in cases of multiple creditors against the estate.
These cases are highly technical and the stakes are often high. Make sure to get a better understanding of your circumstances and how the law may affect you by working with an experienced Oklahoma trust attorney.
Contact an Experienced Irrevocable Trust Attorney in Tulsa
To gain the assurance your estate plan meets your future needs contact an accomplished Tulsa probate attorney knowledgeable about Oklahoma trust laws at Oklahoma Will & Trust. To make an appointment for your consultation at call (918) 876-4500. A skilled and sympathetic probate lawyer can help you understand the probate process and make sure it goes more smoothly.