Irrevocable Trusts After Geyen

Effective July 1, 2005, the State of Minnesota passed a Statute which stated that all irrevocable trusts will be deemed revocable when a person applies for Medical Assistance (originally codified as Minn. Stat. § 501B.895 and recodified as § 501C.1206 with the adoption of the Uniform Trust Code in 2016). This effectively eliminated the ability, in the State of Minnesota, to use irrevocable trusts to shelter assets from being counted in a Medical Assistance eligibility determination, even if such trust was created and funded prior to the look-back period for uncompensated transfers.

On July 12, 2022, the Minnesota Court of Appeals, in a precedential opinion that was not appealed further, held that this statute was “preempted” by federal law and therefore unenforceable. Since this opinion was issued, the Minnesota Department of Human Services has issued a bulletin providing some guidance for how Medical Assistance will treat irrevocable trusts going forward and a bill was signed by Governor Walz on June 2, 2022, which repealed Minn. Stat. § 501C.1206 in its entirety effective June 3, 2022.  In this CLE, information will be presented concerning the use of Irrevocable Trusts to shelter assets from being counted in determining Medical Assistance eligibility after the foregoing events; the risks and benefits of particular trust provisions commonly used in Irrevocable Trusts, including potential estate recovery issues; and the potential for future litigation given some of the positions taken by the Minnesota Department of Human Services.

This CLE is approved for credit through October 7, 2024.