Aging In Michigan - April 2020

Focus on Medicaid Planning- The SBO Trust is Back

What It Is and Why You Might Care

It’s probably taken longer than it should have for elder law attorneys to return to using the SBO Trusts. Their use was abandoned after the Michigan Department of Health and Human Services started treating SBO Trusts as “countable assets.” But that changed when the Michigan Supreme Court issued an opinion reinstating the old rules.

The term “SBO Trust” is short for “Solely for the Benefit Of” trust. These types of trusts are used in Medicaid planning. When used correctly, they can allow a person who’s spouse is entering into long term care and applying for Medicaid assistance to shelter assets that exceed the socalled “protected spousal amount.”

“Medicaid planning is full of formulas,” explains Attorney Joe Weiler. “One of those formulas says how much a person can keep if they have a spouse who is applying for Medicaid. Let’s say the formula awards that person a protected amount of $100,000, but they actually have countable assets of $150,000. With an SBO Trust that additional $50,000 does not have to be spent down, but can instead simply be placed in trust and then returned to the healthy spouse over a period of time”

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