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Michigan’s highest court reversed the ruling in Hegadorn v Department of Human Services. In Hegadorn, three women were denied benefits due to irrevocable trusts counting towards their available assets. The trusts, created by their husbands, were irrevocable “sole benefit trusts.” These trusts allowed the women to distribute the assets in the principal to their husbands as they saw necessary. However, there was an exception that all the resources in the trust would have to be used up during the husband’s lifetime.
The appeals court agreed with the attorney for the state that “assets placed by an institutionalized individual’s spouse into an SBO Trust are countable assets for determining whether an individual is eligible for Medicaid benefits.”
In the reversal of this ruling, the Michigan High Court stated that “assets in an irrevocable trust are available to an institutionalized spouse if there are any circumstances, whether likely or hypothetical, under which the trust could make a payment to or for the benefit of the institutionalized spouse.” The court remands for additional hearings.
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