There is still a federal law on the books that states: Whoever …for a fee knowingly and willfully counsels or assists an individual to dispose of assets (including by any transfer in trust) in order for the individual to become eligible for medical assistance under a State plan under subchapter XIX of this chapter, if disposing of the assets results in the imposition of a period of ineligibility for such assistance under section 1396p(c) of this title, shall…in the case of such a statement, representation, concealment, failure, conversion, or provision of counsel or assistance by any other person, be guilty of a misdemeanor and upon conviction thereof fined not more than $10,000 or imprisoned for not more than one year, or both. Pretty scary, no?
Fortunately, the folly of a law that penalizes planners from telling their clients what the law actually says is no longer enforced: On March 11, 1998, then U.S. Attorney General Janet Reno sent a letter to President of the Senate Al Gore and House Speaker Newt Gingrich, in which she stated: Under these unique circumstances, and in light of the fact that, pursuant to this provision, professional advisors such as attorneys would be prohibited from providing truthful, non-misleading advice to their clients about lawful behavior, we are unable to identify a governmental interest that would justify this restriction on protected speech.
Accordingly, we believe that the "counseling" prohibition in Section 1128B(a)(6) of the Social Security Act [i.e., 42 U.S.C. Sec. 1320a-7b(a)(6)] plainly is unconstitutional under First Amendment and cannot survive judicial scrutiny.… "…Consistent with my determination on the constitutional and severability questions, I also am hereby informing the Congress that the Department of Justice will not bring any criminal prosecutions under the current version of that Section. Around the same time, a U.S. District Court judge in New York said that the law could not be enforced for the same reason. In any event, since this time this statute has not been enforced nor even discussed as a possibility of being enforced.