“Thought for the Day” #636 – by Stephen R. Elville, J.D., LL.M.

January 4, 2016

Supplemental Needs Trusts must be drafted with care.  An Ohio appeals court has recently affirmed the state’s decision to count the assets in a fully discretionary supplemental needs trust against a Medicaid recipient because the trust contained language allowing the trustee to use funds for the beneficiary’s health or welfare, and the beneficiary did not obtain a declaratory judgment stating that the trust is an exempt resource.  Cook v. Ohio Department of Job & Family Services (Ohio. Ct. App.,10th, Nos. 14AP-852, 14AP-853, Nov. 19, 2015).  Virginia Cook was the beneficiary of a supplemental needs trust set up by her mother in 2000.  Between 2004 and 2011, Ms. Cook received Medicaid benefits from the Ohio Department of Job and Family Services (DJFS), but upon review of the trust, DJFS terminated Ms. Cook’s benefits in 2013.  The state claimed that the trust was not an exempt resource because it contained language allowing the trustee to use trust funds for Ms. Cook’s health or welfare, and it did not fall within several exceptions.