June 9

Applicant’s Ability to Use House Placed in Trust Does Not Render Trust Available, Mass. High Court Rules

James and Mary Daley created an irrevocable trust. They conveyed their interest in their condominium to the trust, but retained a life estate in the property. Seven years later, Mr. Daley was admitted to a nursing home and applied for Medicaid benefits. The state denied him benefits after determining that the trust was an available asset. Lionel Nadeau and his wife created an irrevocable trust and transferred their house into the trust. The trust provided that the Nadeaus had the right to use and occupy the house, which they did until Mr. Nadeau entered a nursing home and applied for Medicaid benefits. As with the Daleys, the state considered the trust a countable asset and denied benefits.

The Daleys and the Nadeaus appealed, but following hearings the state ruled that the trusts were available assets because the Daleys and Nadeaus had the right to occupy and use the properties that were in the trusts. In separate rulings, Massachusetts trial courts held that both trusts were available assets. (Daley v. Sudders, Mass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015 and Nadeau v. Thorn, Mass. Super. Ct., No. 14-DV-02278C, Dec. 30, 2015). The Daleys and Nadeaus appealed and the Massachusetts Supreme Judicial decided both cases together.

The Massachusetts Supreme Judicial court reverses, holding that the trusts are not available assets. According to the court, "where a trust grants the use or occupancy of a home to the grantors [as in the Nadeau's case], it is effectively making a payment to the grantors in the amount of the fair rental value of that property." The court adds that these payments "do not affect an applicant's eligibility for Medicaid long-term care benefits, but they may affect how much the applicant is required to contribute to the payment for that care." In the Daleys' case, the court rules that because the Daleys hold a life estate, their use of the home is not considered income and "the continued use of the home by the applicant pursuant to his or her life estate interest does not make the remainder interest in the property owned by the trust available to the applicant."

In reaching its conclusion in the Daley case, the court cites the Elder Law section of West's Massachusetts Practice series, written by Harry S. Margolis and Jeffrey A. Bloom of the Boston firm of Margolis & Bloom, LLP.

For a Boston Globe article on the ruling, click here.

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May 29

State Can Recover Non-Medical Expenses From Medicaid Recipient’s Estate

Herman Vollmann received Medicaid benefits while he resided at two different nursing homes. After he died, the state filed a claim against his estate for $22,978.35 to recoup Medicaid benefits paid on his behalf. The amount was based on the per diem rate calculated under the state’s Medicaid plan.

Mr. Vollmann’s estate disallowed the claim, and the state petitioned the court. Both parties asked for summary judgment. The estate argued that the state was entitled to recover only medical expenses, which totaled $360.45. The trial court granted summary judgment to the state, and the estate appealed.

The Nebraska Supreme Court affirms, holding that the state can recover nursing home services that include non-medical expenses. According to the court, “‘medical assistance’ provided to a Medicaid recipient includes costs for his room and board and other ‘nonmedical’ expenses at nursing facilities.”

To read an article from the Omaha World Herald about the case, click here. 

For the full text of this decision, click here.

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May 26

U.S. Supreme Court Rules That an Agent Under a POA Does Not Need Specific Authorization to Sign Arbitration Agreement

Beverly Wellner was an agent under a power of attorney for her husband, and Janis Clark held a power of attorney for her mother. The Wellner power of attorney gave Ms. Wellner the authority to institute legal proceedings and enter into contracts in relation to real and personal property. The Clark power of attorney authorized Ms. Clark to sign contracts on her mother’s behalf. Ms. Wellner’s husband and Ms. Clark’s mother entered the same nursing home, and Ms. Wellner and Ms. Clark signed arbitration agreements on their behalves.

After Ms. Wellner’s husband and Ms. Clark’s mother died in the nursing home, both estates brought suits against the nursing home for negligence. The nursing home moved to dismiss the cases, arguing that the arbitration agreements prohibited the estates from suing in court. A Kentucky trial court and court of appeals allowed the suits to continue. The Kentucky Supreme Court consolidated the cases and ruled that a power of attorney could not authorize a representative to enter into an arbitration agreement without specificallysaying so in the document. The nursing home appealed to the U.S. Supreme Court.

In a 7-1 ruling, the U.S. Supreme Court reverses, holding that the rule the Kentucky Supreme Court enunciated requiring a power of attorney to include a clear statement allowing the authorization of arbitration agreements violates the Federal Arbitration Act because it does not “put arbitration agreements on an equal plane with other contracts.” Delivering the opinion for the majority, Justice Kagan wrote, “by requiring an explicit statement before an agent can relinquish her principal’s right to go to court and receive a jury trial, the court did exactly what this Court has barred: adopt a legal rule hinging on the primary characteristic of an arbitration agreement.”

For the full text of this decision, go to: https://www.supremecourt.gov/opinions/16pdf/16-32_o7jp.pdf

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May 24

Maryland Repeals Filial Responsibility Law

Maryland’s filial responsibility law provided that adult children are obligated to financially support a destitute parent with food, care, shelter, and clothing. The law was not used much in nursing home cases because Maryland law prohibits a nursing home from holding adult children responsible for a parent’s nursing home bill unless the child consents in writing to be financially responsible. However, the law could have been used when a parent under age 65 was under the care of a psychiatric hospital.

The repeal was a bipartisan effort. The arguments for repealing the law were that filial responsibility laws were a holdover from Elizabethan times, and that a parent’s failure to exercise sound financial discretion should not burden the parent’s adult children. To read the full repeal, go here: http://mgaleg.maryland.gov/2017rs/chapters_noln/ch_540_sb0676t.pdf.

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May 22

Reservation of Power of Appointment in Deed Does Not Conflict With Conveyance of Property to Children

Margaret Hession sought legal assistance to protect her house in the event she might need Medicaid benefits. As part of the Medicaid planning, she executed a deed transferring her house to her children. The deed reserved a life estate for her and granted her a special power of appointment that allowed her to appoint the property to any person except herself, her creditors, her estate, or her estate’s creditors. Ms. Hession decided her daughter Deaven Skye should inherit less than her other children. She wrote a will that exercised her power of appointment and reduced Ms. Skye’s interest in the property from one-third to 5 percent.

After Ms. Hession died, Ms. Skye objected to the will and argued that the power of appointment was void. The trial court dismissed Ms. Skye’s objection and admitted the will to probate. Ms. Skye appealed, arguing that the provisions in the deed granting the remainder interests and reserving a power of appointment are irreconcilably repugnant to each other.

The Massachusetts Court of Appeals, rules that the reservation of the power of appointment is consistent with the other provisions of the deed. According to the court, “because of the reservation of the life estate, the deed conveyed not present possessory estates but rather remainder interests; and, because of the reservation of the power, the remainder interests were defined, in part, by this limitation.” The court specifically does not express a “view on the effect of the reserved power of appointment on [Ms. Hession’s] strategy of avoiding MassHealth look-back period regulations.”

For the full text of this decision, click here.

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