CAN SUPPORT ALIMONY BE PAID TO A SPECIAL NEEDS (MEDICAID PAYBACK) TRUST IN ORDER TO PRESERVE OR OBTAIN MEDICAID BENEFITS?

Occasionally a married adult suffers a serious injury or develops a mental or physical disability resulting in the need for pursuit of Medicaid assistance, especially long-term care benefits. Sometimes the nondisabled spouse decides to opt-out of the marriage by means of divorce proceedings. In a longer term marriage, support alimony may be awarded to the disabled now ex-spouse. The receipt of income to the disabled ex-spouse may result in a failure to qualify (or remain qualified) for Medicaid benefits. However, if those support alimony payments are ordered by the court to be paid by the obligor/spouse to the trustee of a (d)(4)(A)* special needs (Medicaid pay back) trust, the payments of the support alimony will not be deemed income to the Medicaid applicant who is the beneficiary of the special needs (Medicaid payback) trust and, thus, will not interfere with the disabled ex-spouse obtaining or retaining Medicaid benefits.

One very important caveat, however, is that, pursuant to Oklahoma DHS rules, the divorce proceedings must be bona fide, that the property division and support alimony, etc., must be fair and not some agreed-upon attempt to leave the disabled spouse with less than his or her equitable share of the marital estate, and that any support alimony payments are, in fact, ordered by the court to be paid to the special needs trust.

 

* a (d)(4)(A) trust beneficiary must be less than 65 years of age at the time of establishment of the trust.

 

Curtis J. Shacklett, Esq.
Barber & Bartz, P.C.
525 S. Main St., Ste. 800
Tulsa, OK 74103-4511
Telephone: (918) 599-7755
Facsimile: (918) 599-7756
Email: cshacklett@barberbartz.com
Website: www.barberbartz.com