A Medicaid Denial That Took Five Years to Undo: What Harves Teaches About Irrevocable Trusts and the Availability Test

In September 2026, the Indiana Court of Appeals decided the latest chapter in a Medicaid case that began in 2019. The decision itself is narrow: it holds that the family could not reopen a civil rights claim or collect attorney's fees after the state agency reversed its denial of benefits. The case deserves attention from Ohio and Missouri families because of its history. A 91-year-old woman's assets were moved into an irrevocable trust by her children, the state treated those assets as hers, and the question of whether she was eligible took more than five years and two appeals to resolve. Because the rule driving the denial is federal, it applies to our clients as much as it does to Indiana.

What Happened to Natalie Harves

In January 2019, Natalie Harves, then 91, signed a package of documents, including a power of attorney naming her daughter, Karen Sue Cutter, as her attorney-in-fact and health care surrogate, with two other children as successors. The children created an irrevocable trust, the N. Harves Family Heirs Trust, and Mrs. Harves's assets, which she valued at $557,240, were placed in it. According to the 2023 opinion, the trust's recitals described property transferred as reimbursement for the health care and assistance the children had provided, and Karen and Richard Harves served as trustees. Four months later, Mrs. Harves applied for Medicaid nursing home benefits.

The Indiana Family and Social Services Administration denied the application in December 2019, finding that the trust assets were available to her and that her resources were over the limit. She died three days later. Her personal representatives appealed, and the trial court affirmed the denial. In September 2023, the Court of Appeals reversed and sent the case back to the agency, so the agency, not the court, would decide the one question nobody had yet answered. On remand, as reported in a case summary of the 2026 decision, the agency approved the application and paid full coverage for July through December 2019 in November 2024, more than five years after the denial.

The Test That Decides Whether the Trust Counts

Federal law, in 42 U.S.C. § 1396p(d), treats the principal of an irrevocable trust as an available resource if there are any circumstances under which payment from the trust could be made to or for the individual. The Court of Appeals applied that rule as a three-part test: the individual's assets were used to fund the trust, the trust was established by the individual, a spouse, or a person with legal authority to act for the individual, and there are circumstances under which payment could be made to or for the individual's benefit.

The court found that the first two parts were met. The assets were hers, and an attorney-in-fact has legal authority to act for the individual, so a trust the children set up with her assets, while one of them held her power of attorney, fell within the rule. The agency and the trial court never decided the third part, and the ALJ's statement that the trust was created for the sole benefit of a disabled appointee was not supported by the trust, a point the agency conceded. The court would not decide the question for the agency and sent the case back. The lesson for drafting is that the third part is where these cases are won or lost, and the answer lies in the words of the trust.

How Ohio and Missouri Treat the Same Question

Ohio's version of the rule is Ohio Administrative Code 5160:1-3-05.2. As I read it, a trust funded with the individual's assets after August 10, 1993 that falls in this category is countable to the extent any circumstance exists in which payment could be made to or for the individual, and the rule says the agency does not consider when payment could be made. It also provides that a trustee's discretion does not take the trust out of the rule, and it does not carve out an exception for irrevocable trusts generally. The exempt trusts, such as special needs, pooled, and qualified income trusts, are listed separately. A trust that leaves the trustee any room to pay principal or income to the grantor, even in a remote circumstance, is therefore at risk in Ohio.

Missouri applies the same federal statute through MO HealthNet rules and manuals. The Family Support Division’s Checklist for Self-Settled Trusts Subject to 42 U.S.C. § 1396p(d)(3) confirms that a self-settled irrevocable trust funded with the participant’s (or spouse’s) assets is treated as a resource if circumstances exist under which trust assets may be made available to or for the benefit of the participant or the participant’s spouse, regardless of the extent of the trustee’s discretion. Transfers into such a trust are also subject to the transfer-penalty rules under § 1396p(c) unless an exception applies. Special-needs, pooled, and qualified-income trusts are handled under separate checklists. Because manuals and checklists are updated, confirm the current version and review the specific trust language against it before relying on this article for a Missouri client.

What the 2026 Decision Adds

The 2026 decision is about what happens after you win. As summarized, the family returned to the trial court after the agency reversed itself and asked to be relieved from the earlier judgment on their federal civil rights claim, so they could seek attorney's fees. The Court of Appeals held that the trial court did not abuse its discretion in denying that motion. The agency's change of position did not alter the ground on which the claim was dismissed, which was that the family sought mainly retrospective payment of money from the state treasury and had alleged no ongoing injury an injunction could fix. The court also said that the earlier ruling stood because the family had not argued its merits on appeal.

The practical point is simple. Winning an eligibility appeal does not mean the agency pays your lawyer, and the federal civil rights route to fees was closed to this family. 

What Clients Can Do

• Know Who Is Creating the Trust: If an agent under a power of attorney creates a trust with the principal's assets, the law treats the principal as having established it. Confirm that the power of attorney authorizes the transfer, and keep the agent's role and the family's interests separate and documented.

• Draft Against the Availability Test: Write the trust so that no circumstance exists in which principal or income may be paid to or for the grantor, and test each provision against that question. In Ohio, trustee discretion and the timing of payment do not rescue a trust.

• Separate Availability From the Look-Back: A trust that passes the availability test is still a transfer, and a transfer within the five-year look-back period can produce a penalty period. These are two separate hurdles, and the Harves case was decided at the first.

• Document Caregiver Payments Before They Are Made: If children provide care, a written agreement made in advance, at fair market value, and followed in practice is much easier to defend than a reimbursement arranged after the money is at stake.

• Plan for the Time and Cost of an Appeal: The family waited more than five years for benefits, and fees were not recovered. Build the file at the start, keep the trust and the supporting records together, and talk with the family about the cost of a contest before it begins.

• Confirm the Law for Your State: The federal statute is the same everywhere, but the agency rules, manuals, and appeal procedures are not. Have an elder law attorney review the trust before funding it.

Conclusion

Harves is not a loss for the family on the merits because, in the end, the agency approved the application. It warns what it takes to get there. The assets were moved to a trust created by the children, the agency treated them as available, and the answer depended on a question about the trust's language that neither the agency nor the trial court had examined. A well-drafted plan answers that question on the first page. For state-specific advice, please consult an Ohio or Missouri elder law attorney.

Five Generational Shifts Reshaping Family Wealth Planning, and What They Mean for Aging in Place

In September 2026, J.P. Morgan Wealth Management published Five Generational Shifts Reshaping Family Wealth Planning, written by Chris Pegg of its outsourced family office practice. It opens with a fictional family, the Parkers, gathered for a milestone birthday. Over coffee the next morning the talk turns practical: a daughter asks whether the family can help with a home, a son asks who is actually in charge of the long-term financial plan, and the parents admit they feel responsible not only for the money but for the culture that will shape how it is used after they are gone. The article is written for wealthy families, but the conversations it describes happen at every income level, and they are the same conversations that decide whether an aging parent's plan holds together. Here are the five shifts the firm reports, and what each means for the families we serve.

Cost-of-Living Pressure Is Changing How Parents Help Adult Children

J.P. Morgan observes that young adults face much higher costs for housing and food than earlier generations did, which delays milestones such as buying a home or starting a family. The Census Bureau data behind that point are striking: among 25- to 34-year-olds, 45 percent had reached all four milestones of independence, work, marriage, and parenthood in 1975, compared with 21 percent in 2024. More families are therefore willing to help. The firm warns that help given informally and sporadically breeds sibling comparisons, blurred boundaries, and confusion about whether a gift was a one-time offer or an ongoing commitment, and it urges parents to decide by principle, not by personality.

For our clients, the stakes are higher because the parents are also planning for their own care. A down payment for a daughter may be a reasonable gift, but it can also matter under the Medicaid look-back if the parent needs long-term care within five years. Unequal help to children also becomes the raw material for a contest after death. The planning answer is to decide in advance whether help is a gift, a loan, or an advance on inheritance, write it down, and treat each child by a stated rule. Our clients record these decisions on "Schedule B, Gifts and Loans," in their trust binder, which shows whether each transfer is a gift, and whether each loan is to be forgiven or repaid at death. Clarity matters.

Ethics and Philanthropy Are Becoming a Higher Priority

The article reports that some families use values as an anchor, writing values statements that say who they are, how heirs should behave with the money, and what impact the family hopes to have. Giving often carries that purpose. Families form charitable entities, name causes, and involve younger members in choosing recipients, which gives the next generation a relatively safe place to learn shared decision-making.

Formal values statements and private foundations are uncommon even among larger estates, and J.P. Morgan is writing for families at the top of that range. The idea scales down well, though. A letter of wishes that accompanies the estate plan, a charitable bequest, or a donor-advised fund that a grandchild helps direct all give the family a way to talk about what the money is for. That conversation is easier to have while the client can still lead it.

Younger Generations Are Demanding Transparency

J.P. Morgan reports that younger family members expect more openness about family wealth than their elders did, and that this can help or hurt. More conversation can make members feel valued, but it can also push parents and grandparents to share more than they planned, sooner than they intended. The firm points to its own research, The Quiet Disconnect in Family Wealth Conversations, which finds that about seven in ten family members have difficulty discussing wealth. Among its figures, 87 percent of millennials and Gen Z value these conversations, while about a third of boomers say they are not important, and about one in five family members avoids or postpones the topic. Many learned key information only after a crisis.

That last finding is the point for incapacity planning. A crisis is exactly when an agent under a power of attorney or a successor trustee needs to know where the documents are, who holds the accounts, and what the parent wants. The article's call for clear rules about what is shared, when, and with whom is the same idea behind a family communication plan, such as the one in our post on building a family command center. Sharing the plan does not mean sharing the numbers. It means that the people who will act know their roles before they have to.

Premarital Planning Is Becoming More Important and More Sophisticated

The article ties this shift to later marriages and blended families, often with business equity in the mix. Families are using prenuptial agreements together with trust protection. The article's example is an inheritance left to a child in an irrevocable trust meant to keep it nonmarital, backed by a prenup that says the same thing. A separate non-marital revocable living trust can serve the same purpose. Some families pay for independent counsel for the soon-to-be spouse, and some add goodwill gestures such as paying off student loans or putting a newlywed home in both names.

The same dynamics apply later in life. A widowed client who remarries at seventy-five faces the same questions with higher stakes: whose children inherit what, who makes health care decisions, and how a spouse's care needs affect the other's assets. The principle in the article holds at any age. Independent counsel and an open conversation build trust, and an agreement discussed early is a gesture of respect, not an accusation.

Families Are Leaning Into Health Concierge Services

The final shift is about health care. Because medical care is complex and expensive, some families hire concierge services that coordinate providers and open access to specialists, so decisions can be made quickly when the family is stressed. The article lists care navigation, patient advocacy, coverage decisions, and privacy as the pieces to plan.

Most families do not need a concierge, but every family needs those four functions. A health care power of attorney and living will name who decides. A HIPAA release lets that person talk to the doctors. A geriatric care manager or a trusted family member can navigate and advocate. And a hospital discharge card in the planning binder tells the hospital that the goal is to go home. Our Aging in Place Planning Workbook walks families through these steps.

What J.P. Morgan Suggests Families Do

J.P. Morgan ends with five steps for adapting a family's plan. They are written for large family offices, but each one scales to any family, so the list below restates them and adds a word on how they apply to our clients.

• Clarify the Terms of Support: Be flexible about giving help as needs arise, but be clear about the intention to treat similarly situated family members fairly.
• Put Values Into Practice: Define and write down the family's values, and act on them personally and through giving.

• Create a Transparency Plan: Decide in advance how and when the family's plan will be shared.

• Prepare for New Family Members: Discuss prenuptial agreements early and respectfully, offer independent counsel, and welcome new family in ways that reflect the family's values.

• Plan for Family-Wide Health Care: Coordinate insurance and coverage so every family member gets guidance and keeps access to care.

None of the five steps requires a complex structure. Each requires a decision, made early and written down, by a family willing to talk about it.

The article closes with a line that is worth keeping: the more resilient families are not the ones with the most complex structures but the ones with the clearest shared understanding. That is also what elder law planning tries to produce. The documents matter, but the family's shared understanding of what the documents say, and why, is what makes them work and makes the plan resilient. Source note: the shifts described here are J.P. Morgan's observations from its client relationships, aimed at families with significant wealth, not a survey of the general population. The research figures above come from a separate J.P. Morgan study.

Trump Accounts (530A) vs. 529 Plans: A Lawyer's Perspective

A recent New York Times article advises that the new Trump Accounts, formally Section 530A accounts, are worth opening primarily to capture free government and philanthropic seed money. The IRS reports in IR-2026-129 that nearly 70 million accounts are open, and 27 million have received funds. The seed money is real: the federal government deposits $1,000 for each child born from 2025 through 2028. Clients are asking whether to fund these accounts for children and grandchildren. From an elder law and estate planning perspective, the more important questions are who controls the account and what happens when someone dies.

The Account Belongs to the Child

Under Revenue Procedure 2026-25, a Trump Account is a traditional IRA established for an eligible child, and the child is treated as its owner. Parents or guardians act as custodians until the child turns 18. Distributions are generally barred until January 1 of the year the child turns 18, and contributions are not deductible. Under § 530A, contributions other than the exempt ones, such as the federal seed deposit and certain charitable contributions, are capped at $5,000 a year. That limit is aggregate: it applies to all non-exempt contributions to the child's single account combined, whoever makes them, and it is not a per-donor limit. Parents, grandparents, aunts, uncles, and friends share one $5,000 allowance.

This is the opposite of a 529 plan, and the difference drives everything below. A grandparent who opens a 529 plan owns it, keeps control, can change the beneficiary, and can name a successor owner. A grandparent who contributes to a child's Trump Account makes a completed gift to the child and keeps nothing: no control, no ability to take it back, and no successor owner to name.

Who May Open the Account, and Where Grandparents Fit

A grandparent usually cannot open the account. Under the proposed regulations, the person who may make the election to open, or claim, an account follows a priority order: generally a legal guardian first, then a parent, then an adult sibling, then a grandparent, with limited additional options in some circumstances, such as certain child-welfare agencies. A grandparent generally cannot open or claim an account if a higher-priority person, a parent or guardian, is available. That is not a technicality. For a grandchild born before 2025, the election includes a sworn statement that no higher-priority person is available, and the guidance does not define "available." A grandparent who signs it carelessly risks an invalid election and a false statement made under penalty of perjury.

Once the account exists, the rules are friendlier. Grandparents, other relatives, employers, and philanthropic sources may contribute, subject to the annual limit, but they do not open a second account. Treasury has also implemented automatic enrollment for many eligible children, so a parent or guardian typically claims and activates the auto-created account. That means the practical advice to a grandparent is usually to ask the parents whether an account already exists and to contribute to it, not to open one. Because the temporary regulations issued September 30 replaced the earlier proposals, confirm the current priority rules before anyone signs an election.

Quick Comparison: 529 Plans and 530A Accounts

529 plans remain the superior dedicated education savings tool for most families. A 530A account functions more like a starter retirement account for a child:

• Tax Treatment: A 529 plan offers tax-free growth and tax-free withdrawals for qualified education expenses. A 530A account is a traditional, not Roth, IRA. Growth is tax-deferred, but withdrawals are taxed under IRA rules, and the account is not tailored to education expenses.

• Main Attractions: The main current attractions of a 530A account are the $1,000 federal seed deposit for children born 2025 through 2028 and additional philanthropic contributions. A 529 plan offers no seed deposit, but it is built for the goal most families actually have.

• Contribution Limits: 529 plans allow high contributions. Contributions to a 530A account are limited to $5,000 a year in the aggregate from all non-exempt sources, indexed after 2027.

• Flexibility: A 529 owner can change the beneficiary and decide when and how the money is used. A 530A account is tied to the one child it was opened for.

• Who Owns It: A 529 plan belongs to whoever opens it, so a grandparent or parent keeps control. A 530A account belongs to the child, and the grandparent has no control.

• Estate Planning Coordination: A 529 plan offers stronger protection and planning options when coordinated with trusts and successor-owner designations. A 530A account cannot be held in a trust and has no successor owner, because the child is the owner.

In short, take the free seed money, but do not let it displace a 529 plan for a family whose goal is education, or for a grandparent who wants to keep control of the money.

Gift Tax and the Safe Harbor

Revenue Procedure 2026-25 gives donors a safe harbor. Qualifying cash contributions made before the child turns 18 are treated as completed gifts that are not gifts of future interests, so the annual exclusion applies ($19,000 per recipient for 2026). The total of everything a donor gives that child in the year must stay within the exclusion, and the donor must not file a Form 709 for the year for any purpose. A grandparent who also funds a 529 plan or pays tuition directly needs to count the account contribution along with every other gift to the same grandchild.

What Happens When Someone Dies

• If the Person Who Contributed Dies: Nothing happens to the account, because the gift was complete. The account does not depend on the person's will or trust, and there is nothing to retitle or leave to anyone. That simplicity is a benefit, but it also means the donor has no way to protect the money if the family's circumstances change.

• If the Child Dies Before the Year the Child Turns 18: Under § 530A(d)(6), the account stops being a Trump Account, and the distribution restriction no longer applies. The fair market value, less the child's basis, is taxed as ordinary income to the person who receives it, or to the child's final return if the estate receives it. Basis excludes the federal seed deposit and charitable contributions, so those dollars are fully taxable. I could not find clear guidance on who may sign a beneficiary designation for a young child or what the default is if none is made. The responsible party manages certain administrative matters during the growth period, but death-benefit designations appear to be left to the custodian’s account agreement and ordinary IRA rules once the account ceases to be a Trump Account. Ask the trustee before assuming anything.

• If a Parent Dies: The account is the child's, but a minor needs an adult to act for the child. There does not appear to be an automatic successor-custodian rule comparable to some state UTMA statutes, so the practical protection is the guardian nomination in the parents' plan. Parents should name a guardian for minor children, and the family should plan for someone to manage the account and stay on top of its reporting.

• After the Child Turns 18: The account becomes the child's own traditional IRA, and an eighteen-year-old controls it. No trustee or successor owner stands between the child and the money. Ordinary IRA rules apply, including the 10 percent additional tax on early distributions unless an exception applies, taxation of withdrawals that includes any basis (the distribution rules apply to a Trump Account separately from the child's other IRAs), and, eventually, required minimum distributions. Whether a particular grandchild should have that control is a family question to settle before the contribution, not after.

The rules are still moving. Treasury and the IRS issued temporary regulations on September 30, 2026, together with related proposed rules. They address how accounts are established, automatic enrollment, and qualified general contributions, and comments are due November 30, 2026. Administration details and beneficiary designations can still change, so confirm the current rules before relying on any of this.

Special Needs and Disability Benefits

For a grandchild who receives, or may later receive, SSI, the account needs planning. SSA's POMS instruction SI 01120.250, as summarized by Empire Justice, excludes the account from income and resources until January 1 of the year the child turns 18. After that, it can count. The statute allows a tax-free transfer of the entire balance to an ABLE account in the calendar year the child turns 17. Because the child owns the account, a special needs trust cannot hold a Trump Account, so a family with a disabled grandchild should treat these accounts as a bridge to an ABLE account and calendar the transfer.

The Elder Law Issue Most Articles Skip

A grandparent's contribution is a gift. For a client who may need long-term care within five years, it is a transfer for less than fair market value that can matter under the Medicaid look-back, even if it comes within the gift tax exclusion. A well-documented, modest annual gift may be reasonable for a healthy client. For a client with declining health, weigh the same gift against the client's care plan, not because seed money is available.

What Clients Should Consider

• Decide Who Gets Control: If a grandchild is not ready to control an IRA at 18, a 529 plan that the grandparent owns, or a trust, may fit better than a Trump Account.

• Coordinate the $5,000 Limit: The limit is shared by every non-exempt contributor to the child's one account. Tell the family who is giving what, because you must withdraw excess contributions, and the net income on the excess is subject to a 100 percent additional tax.

• Keep the Gifts Within the Safe Harbor: Contribute cash, count every gift to that grandchild for the year, and avoid filing a Form 709 where the safe harbor applies.

• Coordinate With Guardianship Nominations: Parents should name guardians for minor children so that someone has clear authority over the child's accounts.

• Plan for Disability Benefits: If SSI is a possibility, calendar the ABLE transfer for the year the child turns 17.

• Check the Long-Term Care Picture: Before an older client gives anything, look at the client's own health, the look-back, and the care plan.

• Do Not Promise Creditor Protection: Section 530A does not create any special federal creditor protection for these accounts, so do not assume a child's account is shielded from creditors.  State law governs general creditors' reach.

Conclusion

Take the free seed money, and understand what you are accepting. A Trump Account is a child's IRA, not a parent or grandparent's estate planning tool. It works as a modest supplement. It does not replace a 529 plan, and for a grandparent who wants to keep control, it is not a substitute. Decide whether to fund it with the whole plan in view: the donor's circumstances, the family's guardianship nominations, and the donor's own care.

The Two-Year S Corporation Trap in Your Late Parent's Revocable Trust: Docket the QSST or ESBT Election the Day of Death, Not the Day the Grace Period Ends

A farmer, a contractor, or a small manufacturer puts his S corporation stock into his revocable living trust, as he should. He dies. The trustee, a grieving daughter with a good accountant and a busy life, administers the trust over the following year or two. Nobody files anything with the IRS about the stock, because nothing seems to have changed. Then, two years after the date of death, the corporation quietly stops being an S corporation. No notice arrives. No one decides anything. The tax status the family business has relied on for decades simply ends on a date fixed the day Dad died.

This is not a hypothetical. On October 23, 2026, the IRS released Private Letter Ruling 202643006, dated July 30, 2026, which addresses exactly this failure. It is a good reminder of a calendar item that trust administrators routinely miss, and it is the reason for the advice in the title: put the election on the calendar when the grantor dies, not when the grace period is about to end.

Two terms carry most of this article, so here they are in plain language. A QSST, a Qualified Subchapter S Trust, is a trust with a single income beneficiary who receives all of the trust’s income, and who is treated for income tax purposes as the owner of the S corporation stock the trust holds. An ESBT, an Electing Small Business Trust, is a trust that can have several beneficiaries and can hold income back, and that pays tax on its S corporation income at the highest rate. Each qualifies only if an election is filed, which is why the calendar matters. Both are explained more fully below.

Why the Grace Period Exists

An S corporation is a corporation that has elected under Subchapter S of the Internal Revenue Code to pass its income, losses and credits through to its shareholders instead of paying corporate income tax. To keep that election, it can have only certain kinds of shareholders. Under Internal Revenue Code § 1361(c)(2)(A), a trust is an eligible shareholder if all of it is treated as owned by one individual who is a U.S. citizen or resident. That describes the ordinary revocable living trust during the grantor’s life. The trust is a grantor trust, the grantor is the deemed owner, and the S corporation has no problem.

At death, the trust usually becomes irrevocable and is no longer treated as owned by the grantor. Left alone, it would immediately become an ineligible shareholder and the S election would terminate. Congress softened that result. Section 1361(c)(2)(A)(ii) allows a trust that was a grantor trust immediately before the deemed owner’s death to continue as an eligible shareholder for the two-year period beginning on the day of death. That is the grace period.

The grace period is a bridge, not a destination. Before it runs out, the trust must become something the S corporation rules recognize permanently, or the stock must leave the trust.

What Has to Happen Before the Two Years Run Out

• A Qualified Subchapter S Trust (QSST): Under § 1361(d), a trust with one income beneficiary, who must receive all of the trust’s income currently, can qualify. The beneficiary, not the trustee, makes the election. The beneficiary is treated as the owner of the S corporation stock for income tax purposes, which is the trade for the simplicity. If the trust creates separate shares for different children, each separate share is treated as a separate trust and each needs its own election, and a separate election is made for each S corporation the trust holds.
• An Electing Small Business Trust (ESBT): Under § 1361(e), a trust with more than one beneficiary, or one that accumulates income, can qualify. The trustee makes the election. The S corporation income is taxed to the trust at the highest rate, which is the price of the flexibility.
• Moving the Stock Out: The trust can distribute the shares to individuals who are eligible shareholders. The trust then no longer holds S stock and the problem goes away, although this may not be what the trust says should happen or what the family wants.

The decision between a QSST and an ESBT belongs in the first year of administration, not in the last month. It depends on how the trust is written, who the beneficiaries are, whether the trust needs to hold income back, and how the trust’s tax rates compare with the beneficiaries’ rates. Some trusts do not qualify as either without a court-approved or nonjudicial reformation, and that takes time.

What PLR 202643006 Shows

The facts in the ruling are simple and, for that reason, instructive. A trust owned S corporation stock and was treated as owned by an individual, A, so it was an eligible shareholder. A died. The trust agreement divided the trust into separate shares for two income beneficiaries, B and C. The trust remained an eligible shareholder for the two years after death. After the two years ended, the trust continued to hold the stock.

The corporation represented that the separate shares met the QSST requirements when the two years ended. But B and C never filed QSST elections. The IRS concluded that the corporation’s S election terminated on the day the two-year period ended, because the trust became an ineligible shareholder when the elections were not timely filed.

The ending is the good news. The IRS found the termination was inadvertent and, under § 1362(f), treated the corporation as continuing to be an S corporation. But the relief came with conditions. B and C each had to file a QSST election effective as of the end of the two-year period, within 120 days of the ruling date, with a copy of the ruling attached. The corporation and its shareholders had to agree to make any adjustments the IRS required. The corporation also had to represent that all of its returns had been filed consistently with S status, and that B and C had reported the trust’s income as if the elections were in effect. The IRS also said it expressed no opinion on whether the corporation was otherwise eligible, whether the separate shares existed, or whether any share was a valid QSST.

The ruling follows the pattern of other recent letters, including PLR 202449001, where a trust that could have been a QSST also failed to elect after the two years ended, and the IRS granted the same kind of relief.

A Caution About Reading the Ruling

A private letter ruling is addressed only to the taxpayer who asked for it and, under § 6110(k)(3), may not be used or cited as precedent. It tells us how the IRS has approached this problem, not what it must do for your client. The ruling dealt with a QSST. It did not discuss an ESBT election, nor did it turn on the faster, cheaper late-election procedure the IRS offers in Rev. Proc. 2013-30, which generally requires a corrective filing within three years and 75 days of the intended effective date. If that window has closed, a ruling request is the remaining road, and it costs time, user fees, and professional fees that a calendar entry would have avoided.

Why Docket From the Date of Death

The instinct is to calendar the end of the grace period and work backward. That instinct causes the problem, for several reasons.

• The End Date Is Fixed by the Death, and Nobody Remembers It: The two-year period begins on the day of death. The day the family receives the date-of-death valuations, the day the court case closes, and the day the trust is funded all fall on different dates. Only the date of death is on the certificate. If you make the calendar entry on the date of death, it is correct from day one.

• The Work Takes Longer Than the Election: The election is a one-page filing. The work behind it is not. Someone has to read the trust to see whether it divides into separate shares, requires distribution of all income, and can qualify as a QSST or ESBT at all. If it does not, the trust may need to be reformed or the stock distributed, and either takes months. A calendar that starts at the end of the period leaves no time for that.

• The Right Person May Not Be the Trustee: A QSST election is made by the income beneficiary, not the trustee. That person may be a surviving spouse, a child living in another state, or a minor with a legal representative. Finding that person, explaining what is being asked, and getting a signature is its own project.

• People Change: Over two years, a successor trustee resigns, an accountant retires, an attorney closes the file, and the family business hires a new bookkeeper. A date written on the calendar at the beginning survives those changes better than a good intention.

• The Consequence Is Severe and Hard to Reverse: When the election terminates, the corporation becomes a C corporation. It pays entity-level tax, its shareholders may face a second layer of tax on distributions, and, under § 1362(g), it generally cannot re-elect S status for five years without IRS consent. The relief in the ruling is discretionary. It is available only if the failure was inadvertent and the corporation and shareholders accept the IRS’s terms.

A Docket That Works

Here is the schedule I recommend to trustees and to the lawyers and accountants who advise them. Enter every item on the day of death, and assign each one to a named person.

• Day of Death: Identify every trust that holds S corporation stock. Record the date of death and calculate the last day of the two-year period. Enter the end date and the interim reminders. Confirm that the trust was wholly a grantor trust immediately before death, because the grace period applies only to that kind of trust. Notify the corporation’s accountant.

• Within 90 Days: Obtain the trust agreement, any amendments, and the corporation’s governing documents. Determine whether the trust divides into separate shares and who the income beneficiaries are. Make a preliminary decision between a QSST and an ESBT, or a distribution of the stock.

• Within One Year: Make a final decision. If the trust must be reformed to qualify, begin the court or nonjudicial process now. Confirm the amount and timing of the income distributions required for a QSST. Confirm who will sign the election.

• At 18 Months: Prepare the election and any separate-share elections, one for each share and each corporation. Make sure the person who must sign has the document.

• At 21 Months: File the election, if it has not already been filed, and obtain proof of filing. Do not wait for the last weeks. After Filing Keep the filing and proof of delivery with the trust records. Provide a copy to the corporation, which should keep it with the corporate minute book. Have the preparer of the trust’s and the beneficiary’s returns confirm that the returns match the election. 

The exact filing deadline for the election, measured from the end of the period, is set by Treasury Regulation § 1.1361-1, and the procedure differs for a QSST and an ESBT. A cautious practitioner treats the election as due at or before the end of the two-year period, not some weeks afterward, and reads the regulation for the particular trust before relying on any later date. If your trust is already past that point, call a professional promptly, because the corrective options narrow with time.

What This Means for Ohio and Missouri Families

Many of the families I work with own farms, family businesses, and professional practices that are organized as S corporations. They are told, correctly, that a revocable living trust avoids probate. They are less often told that a revocable living trust holding S corporation stock creates a deadline after the person who signed it dies. The deadline is the same in Ohio, Missouri and every other state because it comes from federal tax law. The state-law steps that go with it, including reading the trust, deciding who the trustee will be, and reforming the trust if needed, differ from state to state.

If you are the trustee or the beneficiary of a trust that owns S corporation stock, or you are the owner of an S corporation and have a revocable trust, there are two practical steps. First, ask your attorney and your accountant whether the trust is drafted to qualify as a QSST or an ESBT, and whether it divides into separate shares at death. Second, ask who will put the date on the calendar. A well-drafted trust can make the later decision easier, and a clear instruction in the trust to the successor trustee costs nothing.

This article is general information, not legal or tax advice for any particular trust or corporation. The rules are technical and the deadlines are unforgiving. If you are the trustee of a trust that holds S corporation stock, or know someone who is, contact my office as soon as possible.

Medicare Advantage in 2027: What the Plan Count Does Not Tell You, and What to Do Before December 7

Open enrollment for 2027 ends December 7, and millions of people will find that their current plan has ended or been replaced on January 1. A new analysis from the consulting firm Wakely, Medicare Advantage 2027: Beyond the Plan Count, and its full white paper, compares the 2026 and 2027 Medicare Advantage markets using the federal government's own plan files. It was written for insurers and analysts, but its numbers matter to families, because a plan change that no one notices can end a relationship with a doctor, a home health agency, or a drug the person depends on. This article translates what Wakely found and adds what a family can do about it. Two cautions first: Wakely's figures are approximate and describe the national market, and the white paper does not break out Ohio or Missouri.

A Market That Is Narrowing, Not Collapsing

Wakely counts 5,844 plan offerings for 2027, down from 5,922 in 2026. The decline comes mainly from general enrollment plans, the ordinary plans open to everyone with Medicare. Special needs plans, which are limited to people with particular circumstances, continued to grow. The paper reads the overall picture as selective pruning: insurers are closing weaker products and expanding targeted ones, not leaving the market across the board:

• Plans That End: Of 1,226 plans that are exiting, more than 6.3 million members, about 18.5 percent of all Medicare Advantage enrollment, are affected, either because their plan terminates or because they are moved ("crosswalked") into another plan.

• No Automatic Landing Spot: About 3 million members, or 8.8 percent of enrollment, are in plans that close without an automatic transition. They must pick new coverage themselves. People who do nothing are moved to Original Medicare on January 1, and without a separate drug plan may pay full price for prescriptions.

• Carriers Leaving: Thirty-four carriers are leaving Medicare Advantage entirely, and 10 are entering, with exits concentrated in Florida, Texas, New York, and Minnesota, according to Wakely.

• Fewer PPOs, More HMOs: HMO plans rose by 63 to 2,531 and local PPOs fell by 83. HMOs are now about 46 percent of offerings. A move from a PPO to an HMO usually narrows the set of doctors and facilities a person can use without penalty, so it deserves a look at the network.

Special Needs Plans Are Where the Growth Is

Special needs plans for people with chronic conditions (C-SNPs) grew 34 percent in 2027, after 56 percent growth in 2026, and the number of companies offering them has doubled since 2023, from about 28 to 56. Most new plans target cardiovascular disease, chronic heart failure, and diabetes. Plans for people who are eligible for both Medicare and Medicaid (D-SNPs) numbered 1,052, down slightly from 1,085 but still the largest special needs category. For someone with one of these conditions, a C-SNP can offer coordinated care, but these plans are available only to eligible people. Wakely reports that one company, Devoted Health, accounts for roughly half of the new C-SNP products, with Aetna, United, and Humana also adding plans.

Leaner Benefits Behind Low Premiums

About two-thirds of 2027 plans have no monthly premium, and more than 69 percent of new plans have none. The cost has moved elsewhere. The average Part D deductible in general enrollment plans rose from $363 to $493, and the average maximum out-of-pocket limit for medical care rose from $5,330 to $5,874. That is consistent with the federal ceiling, which rose by $600, from $9,250 to $9,850. Looking only at the premium can hide a bigger bill. Wakely also reports that, for the first time, plans could apply caps to enrollment, but only 64 offerings had an accepted limit.

What a Family Should Do Now

The practical steps are not complicated, but they depend on someone reading the mail. Every Medicare Advantage member should receive a notice from the plan telling them whether it will continue. The annual enrollment period runs from October 15 through December 7. Extra time exists only for people whose plan is ending or who leave its service area, not for everyone who simply misses the annual deadline. 

When a Medicare Advantage plan terminates or leaves the service area, federal rules give the member a special enrollment period to choose a new plan, and a separate 63-day guaranteed-issue window to buy a Medigap policy that runs until 63 days after the coverage ends. The Ohio Department of Insurance describes it this way for a plan that was not renewed: choose a new plan by December 31 and coverage starts January 1, and if you miss that date, you get an additional 63 days. A member of a plan that closes without a crosswalk who does nothing moves to Original Medicare and may have no drug plan. A member of a crosswalked plan is moved to the replacement plan instead, which may have different doctors, drugs, and costs.

• Read the Notice for the Person You Help: If a parent has memory loss or no longer opens the mail, ask who does. A plan-ending letter that sits in a pile is the most common way this goes wrong.

• Check the Providers and Medications: Look up each doctor, the home health agency, the pharmacy and the main medications in the 2027 plan before the deadline. Ask the home health agency by name whether it takes the plan next year.

• Know the Medigap Window: A person whose plan is leaving Medicare or the service area has a 63-day guaranteed right to buy a Medigap policy, which insurers cannot deny or price based on health conditions. Outside that window, the rules depend on the state. According to the National Association of Insurance Commissioners' chart, Ohio has no "birthday rule" that lets a person switch Medigap each year without health questions, so the guaranteed window may be the best chance to switch. Missouri is different. It has an anniversary rule: a window of roughly 60 days, 30 days before and after the policy anniversary, when someone with a Medigap policy can switch to the same plan letter with another carrier without underwriting.

• Look at the Whole Bill: Compare the deductible, the medical out-of-pocket limit, and the drug costs, not just the premium. Ask whether prior approval is required for home health or a stay in a skilled nursing facility.

• Use Free Counseling: Ohio's Senior Health Insurance Information Program (OSHIIP) can be reached at 800-686-1578, and Medicare itself at 1-800-633-4227. Missouri residents can use the state's counseling program, CLAIM, to confirm the Missouri rules and the dates of the anniversary window.

Why This Belongs in Your Plan for Aging at Home

Aging at home depends on a set of arrangements that fit together: a doctor who knows the person, a home health agency that accepts the coverage, a pharmacy, equipment suppliers, and a way to pay for a skilled nursing stay if one is needed. A change of plan can break any of them without anyone deciding to. Two points belong in your planning documents. First, make sure the person's durable power of attorney is broad enough for the agent to deal with insurance companies and make coverage decisions, because an insurer may not talk to a family member without authority. Second, put open enrollment on a calendar. The agent or a trusted family member should review the plan every October, ideally with the person present, so the decision reflects what matters to them.

One source of caution on the evidence. Federal investigators have found that some Medicare Advantage insurers denied requests that met Medicare's own coverage rules. In a 2022 report, the Office of Inspector General found that about 13 percent of prior authorization denials in a sample from 15 large insurers in June 2019 met Medicare coverage rules, along with about 18 percent of payment denials that met both Medicare's coverage rules and the insurer's billing rules. The sample is old and does not show how common this is today, but it is a good reason to read the plan's appeal rights before you need them.

A Closing Caution

Wakely's numbers come from CMS landscape and crosswalk files released in September and October 2026 and are described by the authors as approximate. Rules and deadlines can change, and plans differ by county, so confirm the details for your own situation with Medicare or a state counselor. 

This article is general information, not legal or insurance advice.