If you have ever been appointed the trustee of a trust, you quickly learned that there are a number of responsibilities you must follow in the administration of the trust. Those responsibilities just recently increased thanks to the Nebraska Legislature. Legislative Bill 72 (LB 72) requires that the trustee must satisfy all claims for Medicaid reimbursement that the state may have before he or she can make any trust distributions.
Nebraska law says that the estate of anyone over the age of 55 who received Medicaid assistance and lived in a medical institution must reimburse the state for the entire amount of the Medicaid assistance provided. When filing to open the estate, the personal representative must notify the Nebraska Department of Health and Human Services, and allow the state to research any possible Medicaid claims against the decedent’s estate. The amount recoverable by the state is a priority claim against the decedent’s estate.
However, many people transfer all of their property to a trust during their life, and there is no need to open an estate with the court at death. Without opening an estate with the court, there is no requirement to notify the state of the death of the trust’s creator. As a result, Medicaid claims the state may have against the decedent remain unpaid since there was no requirement to notify the state at death.
That is no longer the case with the passage of LB 72. Now, the trustee is required to notify the state before making any distributions to the trust beneficiaries, and must either satisfy any Medicaid claims the state has, or obtain a Medicaid release from the state before making a distribution from the trust.
As you are arranging your will or trust, contact the experienced estate planning attorneys at Adams & Sullivan by calling 402-339-9550.