Consider a common set of circumstances for an elder law planner concerning the Medicaid five-year look back period for transfers. The family attorney set up a Medicaid Asset Protection Trust for an elderly client and transferred her largest asset, her home, to the trust.
The trust did not allow trustees to make discretionary principal distributions to anyone. Unfortunately, three years later, the client’s health deteriorated rapidly and she had to be admitted into a nursing home. The client had already depleted nearly all of her cash assets, but was ineligible for Medicaid for another two years because of the transfer. Her son, who lives in California and is his mother’s agent under a power of attorney and trustee of the trust, calls the attorney and asks, “Can we break this trust?”
