Judith B. Paul Law Blog

Wednesday, August 9, 2017

Personal Services Contracts for Medicaid Planning - Are they fair?

Krause Financial Services provides this information about Personal Services Contracts:

Personal Services Contracts (“PSKs”) are widely used in Florida as a Medicaid spend-down tool and allow for immediate Medicaid eligibility for the applicant. If used alone, the PSK poses three non-Medicaid problems to the recipient: (1) excessive income taxes, (2) loss of control, and (3) an unequal inheritance. However, if the PSK is coupled with an immediate annuity and a PSK Annuity Settlement Trust, the problems can be resolved. 

1)  the income taxes are limited to the amount of compensation received in a given year.

2) the monthly payments remaining flow directly to the PSK Annuity Settlement Trust following the death of the parent. The trust can equally distribute them amongst the child and his or her siblings – equal inheritance.

3) monthly payments go only to the child, the child cannot lose the funds – no dominion or control

Thus, with Krause Financial Services and your qualified and experienced Medicaid Attorney, a Personal Services Contract can be structured to overcome those three concerns.

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