As of August 2014, the Michigan Department of Human Services (DHS) has started rejecting “solely for the benefit of” trusts. There hasn’t been a change in the law, but in the way that DHS interprets policy. Previously, a married couple could utilize a “solely for the benefit of” trust for the spouse not entering a nursing home and preserve a majority of a couple’s estate, while the spouse entering the nursing home still qualified for Medicaid coverage. This tool was not employed until a married couple knew which spouse would need nursing home care (i.e. when said spouse went into the nursing home). However, DHS has begun treating assets in these trusts as countable for Medicaid eligibility purposes. This means that the assets are not excluded and may have to be spent before the spouse requiring care will qualify for Medicaid.
For now, planning with a “solely for the benefit of” trust is not a practical solution. As such, it is even more important to discuss and consider other Medicaid planning options ahead of time.