The customer established an irrevocable trust with a corpus of $300,000 on March 1, 2009. He enters a nursing facility on August 15, 2015, and applies for ALTCS benefits that month.
On January 15, 2010, the Trustee gave $100,000 from the trust corpus to the customer’s brother.
Under the terms of the irrevocable trust, the Trustee has complete discretion to disburse the entire trust corpus and all income from the trust to anyone, including the customer. Each month the Trustee disburses $100 to the customer as an allowance and $500 to a property management firm for the upkeep of the customer’s home. This money comes from interest earned by the trust corpus.
The $100,000 gift to the customer’s brother is evaluated as a transfer with uncompensated value. However, the transfer was made before the look-back period begin date of 8/1/2010, and a transfer penalty period is not imposed.
NOTE Since the trustee has discretion to disburse the entire trust corpus to the customer, the entire remaining value of the corpus is a counted resource. In this case the remaining $200,000 is counted. The $100 personal allowance and the $500 for upkeep of the home property are treated as counted income since they are being paid from the trust income.
The customer established an irrevocable trust with a corpus of $350,000 on April 15, 2012. He enters a nursing facility on November 15, 2015, and applies for ALTCS benefits that month.
On January 15, 2015, the Trustee gave $100,000 from the trust corpus to the customer’s brother.
Under the terms of the irrevocable trust, the Trustee cannot disburse any of the trust corpus to the customer. The trust terms do allow the Trustee to make disbursements to the customer from the trust income. Each month the Trustee disburses $100 to the customer as an allowance and $200 for the customer’s car payment.
Since none of the corpus can be disbursed to the customer, the entire value of the trust corpus at the time it became irrevocable is evaluated as a transfer with uncompensated value. The date of the transfer into the trust is within 60-month look-back period. An uncompensated transfer of $350,000 occurred on 4/15/2012. The fact that $100,000 of those funds was later transferred out of the trust to the customer’s brother does not change the amount of the transfer on which the penalty is based. That amount remains $350,000.
NOTE The $100 and $200 disbursed from the trust earnings count as unearned income to the customer.