by Thomas D. Begley, Jr., CELA<\/p>\n
The Concept.<\/em><\/strong> A sole benefit of trust is a creature of HCFA Transmittal 64.[1]<\/a> These trusts have traditionally been used in crisis planning. They can be established for the benefit of disabled persons\u2014a Disability Annuity Trust (\u201cDAT\u201d).[2]<\/a> The idea is that assets would be transferred to an irrevocable trust for the sole benefit of the disabled individual. The assets in the trust were then paid out to the beneficiary on an actuarially sound basis using the actuarial tables contained in HCFA Transmittal 64.[3]<\/a> However, some states, including New Jersey, maintain that despite the clear language in HCFA Transmittal 64, the language in the statute \u201csole benefit of\u201d means that a Medicaid payback provision is required. Because the assets were transferred to an irrevocable trust “for the sole benefit of” a disabled individual, the transfer is not subject to the Medicaid transfer penalty rules.<\/p>\n