Medicaid Planning Is Considered Practice of Law, Requiring License to Practice Law (Fla.)

The Elder Law Section of the Florida State Bar recently petitioned the Supreme Court as to whether it constitutes the unlicensed practice of law for non-lawyers to engage in Medicaid planning activities. The specific activities that the section was concerned about were the drafting of personal service contracts, preparing qualified income trusts, as well as providing general legal advice on the status of Florida law as it relates to Medicaid eligibility. As to the issue of personal service contracts, the court advised that such a document is an agreement where a caregiver agrees to provide certain care and services in exchange for payment, and as such, this agreement is a legal contract. The court cited previous court cases in which it held that the preparation of a contract is the practice of law. Thus, the preparation of a personal services contract is the practice of law, and any unlicensed service, person, or agency preparing such contracts are engaging in the unauthorized practice of law. Qualified income trusts are utilized to shelter income that is in excess of what is allowable for Medicaid eligibility, with a qualified income trust checking account established to hold this income.

The court cited a previous opinion that advised the “assembly, drafting, execution, and funding” of a revocable living trust is the practice of law, and impacts an individual’s important legal rights. To best protect these rights, the court advised, a person preparing such documents must have a greater knowledge of the law than that of an average individual. The court held that the same safety net must apply to qualified income trusts as it does to any other trust. As such, it constitutes the unauthorized practice of law to not only create such trusts, but additionally to execute, fund, or determine the need for such a trust by any unlicensed individual or company. Lastly, the court opined that providing general legal advice (as well as selling ‘legal kits’) on obtaining Florida Medicaid benefits requires an individual to assess all relevant facts, apply those facts to the appropriate law, develop a plan to structure assets in compliance with the law, assist the applicant in executing the plan, as well as create and execute any necessary legal documents to further the planning strategy. Because this type of advice affects significant legal rights of a potential Medicaid applicant, it is reasonable to assume that the person providing the advice must possess knowledge greater than that of an average person, as a result, providing such advice constitutes the practice of law and cannot be engaged in by a person or company not authorized to practice.

In re Advisory Opinion-Medicaid Planning Activities By Non-Lawyers, No. SC14-211 (January 15, 2015)