The Oklahoma Bar Journal February 2024

The FLLC is, in turn, owned by the client’s irrevocable trust. 12 Because the client has no right to invade the principal of the irrevocable trust or serve as its trustee, the FLLC membership interest is, therefore, uncountable for Medicaid purposes. The FLLC operating agreement governs management of the farm. The client wishing to retain control would name themselves as man ager of the FLLC. Additionally, the client can engage in succession planning by designating successor managers and including provi sions like rights of first refusal to increase the likelihood of the farm staying in the family following the client’s death. Lastly, to ensure that the client can continue living on the farm, the irrevocable trust should include a right of occu pancy for the client/grantor. 13

THE USE OF FAMILY LIMITED LIABILITY COMPANIES IN LONG-TERM CARE PLANNING Most of us are familiar with the limited liability company structure. Maybe you set one up for a client with rental properties. Perhaps your own law firm is an LLC. Why have an LLC? Two words: asset protection. Under Oklahoma law, a charging order is the exclusive remedy available to an LLC member’s judgment creditor. 10 As a result, the judg ment creditor has only the rights of an assignee and cannot obtain a membership interest in the LLC or pursue a foreclosure. 11 A family limited liability company (FLLC) is simply an LLC formed by members of the same family to operate a business, which, in our example, is a farm. To begin with, the client would transfer the farm to the FLLC.

OTHER CONSIDERATIONS: THE FIVE-YEAR LOOKBACK Preferably, clients would request our counsel on asset protection and long-term planning when they are healthy and young. But we know that does not always happen. The planning described above is most effective well in advance of the client applying for Medicaid. That is because, in addition to determin ing whether a Medicaid applicant meets the income and asset guide lines, 14 the Oklahoma Department of Human Services (OKDHS) looks back five years to see if the applicant has made any uncom pensated transfers of assets. If so, OKDHS can delay the applicant’s benefits for a period of months or even years, depending on the amount transferred. 15 How, then, do we help the client who has an imminent need for care? Of most relevance to the

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

FEBRUARY 2024 | 25

THE OKLAHOMA BAR JOURNAL