Approximately eight years before Everlenna Roche entered a skilled nursing facility, she established an irrevocable trust and transferred title to her home to the trust. Roche applied for MassHealth benefits upon entry to skilled-care and was initially approved. Benefits were later terminated on the grounds that the trust was a countable asset. Roche appealed. The ALJ upheld the agency decision, concluding that the trust authorized the trustee to sell trust assets and to reinvest the proceeds in any other form of investment, including an annuity. Because the trust allowed distributions of income, the ALJ said, hypothetical annuity payments resulting from any annuity purchased with the sale of the home sale proceeds could be distributed and consequently were available for Roche’s support. A Superior Court affirmed the agency decision. The Massachusetts Court of Appeals reversed. It held that, out of any hypothetical annuity payment to Roche, only the investment income portion of the annuity would be distributable. The trust’s terms required that the portion of each payment representing a return of capital must be retained by the trust. Because there were no circumstances in which the trustee could distribute the trust’s corpus principal to Roche, assets held by the trust were not countable.
Heyn v. Director of the Office of Medicaid, 2016 WL 1466564 (Mass. App. April 15, 2016)
