2023 Update: Minnesota Fully Recognizes Medicaid Protection Trusts

Thanks to the Minnesota Court of Appeals’ ruling in Geyen v. Commissioner, Minnesota Dept. of Human Services, 964 N.W.2d 639 (Minn. App. July 12, 2021), the State of Minnesota now recognizes the effectiveness of a Medicaid Protection Trust. That is, Minnesota held that Minnesota Statutes section 501C.1206 (Minnesota’s “trust busting” statute) is superseded by federal law. Thus, people in Minnesota can protect their assets from nursing home costs and long-term care costs (including memory care) by properly using a Medicaid Protection Trust.

Credit: I appreciate attorney Michael Teeter‘s dedication to this issue including litigating the Braland case and providing written updates on this topic. I also appreciate attorney Margaret Barrett bringing the Geyen case to my attention.

 

The following article is no longer current. It was written before Geyen v. Commissioner, Minnesota Dept. of Human Services, 964 N.W.2d 639 (Minn. App. July 12, 2021). The following article is preserved for background purposes. As noted in the 2023 Update above, Minnesota now fully permits people to protect their assets using a Medicaid Protection Trust.

Protect Assets from Nursing Home and Long Term Care Costs in Minnesota

A Medicaid Protection Trust is a type of irrevocable trust that allows people to protect assets from being used up by nursing home costs and other long term care expenses.

In general, a person must have less than $3,000 to qualify for Medicaid (known as “Medical Assistance” in Minnesota) coverage of nursing home and other long term care costs. A Medicaid Protection Trust allows a person to transfer assets out of their estate so they can qualify for MA coverage sooner. The assets protected in the Medicaid Protection Trust are then protected for loved ones, such as children, grandchildren, and others.

Medicaid Protection Trusts are complex, and often scrutinized by the government once the asset protection begins (when they are needed most). For this reason, many estate planning attorneys do not do Medicaid Protection Trusts.

Medicaid Protection Trusts is a term that defines any trust that protects assets from Medicaid. These may include the following:

  • For married couples, the most common option is the Family Pot Trust.
  • For single individuals, the most common option is the Crow Wing Trust.
  • Other trusts, both testamentary and inter vivos, may also be part of a Medicaid protection plan.

If you are worried about avoiding long term care costs, consider a Medicaid Protection Trust.

Note, if you or a loved one is already in a nursing home, learn more about our crisis Medicaid assistance to protect your assets from nursing home costs before they are depleted.

Crow Wing Trust

The so-called Crow Wing Trust is an irrevocable trust named after an important case decided in Crow Wing County, Braland v. Commissioner of Minnesota Department of Human Services (Dist. Co. File No. 18-CV-11-2249) (Jan. 2002).

In Braland, the court held that Minnesota’s “trust busting” statute (Minnesota Statutes section 501B.895, the predecessor to Minnesota Statutes section 501C.1206), violated federal law regarding medical assistance treatment of trusts.

Since Braland, the DHS has taken the position that Braland is not applicable beyond Crow Wing County. However, the DHS’s position is inconsistent with the court’s holding in Devescovi v. Ventura. See Devescovi v. Ventura, 195 F. Supp. 2d 1146, 1149 (D. Minn. 2002) (holding “that Beltrami County is bound by the decision” in Hennepin County so a subsequent court “cannot address the constitutionality of . . . [a state] statute on federal constitutional grounds”). In Devescovi, the court held that a district court’s decision is binding on other counties. See id.

Thus, people may use a Crow Wing Trust as long as they do so with knowledge of the risks. There are at least two risks:

  1. the Minnesota Department of Human Services may challenge the trust and
  2. the only court case (known by this author) deciding this issue is at the district court level.

A higher court, like the Minnesota Court of Appeals or Minnesota Supreme Court, may come to a different conclusion. However, that may be unlikely because “trust busting” statutes, like Minnesota Statutes section 501C.1206, have been held unconstitutional in courts throughout the United States. Thus, Minnesota’s appellate courts would likely align with the court’s holding in Braland.