Monthly Archives: January 2016

Irrevocable Trust Is Available Asset Because Medicaid Applicant Had Right to Use Trust Asset

January 13, 2016

A Massachusetts trial court rules that a Medicaid applicant’s irrevocable trust is an available asset because the applicant still had a right to live in, use, and get income from the condominium owned by the trust. Daley v. Sudders (Mass. Super. Ct., No. 15–CV–0188–D, Dec. 24, 2015).

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 MassHealth (Medicaid) benefits. The state denied him benefits after determining that the trust was an available asset.

Mr. Daley appealed, but after a hearing the state ruled that the trust was an available asset because the Daleys had the right to occupy and use the condo and the trust granted them the right to convert the trust’s principal into income. Mr. Daley died during the appeal, and his estate appealed to court.

The Massachusetts Superior Court affirms, holding that the trust is an available asset. The court rules that the main trust asset — the condominium — was available to the Daleys because they retained life estates under the deed and continued to use and live in the condo after establishing the trust. In addition, the court holds that the trust is an available asset because the Daleys had the right to income from the condo.

For the full text of this decision, click here.

For commentary on the decision by Harry S. Margolis in his blog, click here.

Federal Court Grants Preliminary Injunction Continuing Medicaid Benefits in Decanting Case

January 13, 2016

A federal district court grants a Medicaid beneficiary’s request for a preliminary injunction preventing the Connecticut Department of Social Services from treating two trusts established for the beneficiary by her deceased mother as countable resources before they were decanted into supplemental needs trusts.  Simonsen v. Bremby (D.Ct., No. 15-cv-1399, Dec. 23, 2015).

Joy A. Miller established two inter vivos trusts for her daughter, Dawn Simonsen, that were funded when Ms. Miller died in 2003.  The trusts, established in Florida, gave the trustee the ability to “pay to [Dawn] or utilize for her benefit so much of the income and principal of her trust as the trustee deems necessary or advisable from time to time for her health, maintenance in reasonable comfort, education and best interest considering all of her resources known to the trustee . . . the trustee is encouraged to be liberal in its use of the funds for her even to the extent of the full expenditure thereof.”

Ms. Simonsen, a quadriplegic on a ventilator, was admitted to a nursing home in October 11, 2013, and she applied for Medicaid on July 31, 2014.  On August 29, 2014, the trustee of the two trusts successfully petitioned a Florida court for permission to decant the two trusts into two new supplemental needs trusts.  Although the Connecticut Department of Social Services (DSS) initially approved Ms. Simonsen’s Medicaid application, it subsequently determined that the original trusts were countable resources and assessed a seven year transfer of assets penalty for the decanting into the clearly inaccessible supplemental needs trusts.  Ms. Simonsen appealed DSS’s decision and while that appeal was pending filed a request for a preliminary injunction with the federal district court asking it to prohibit the state from terminating her Medicaid benefits and to hold that the previous trusts were not accessible resources, voiding the transfer penalty.

Referring to the Social Security Administration’s Program Operations Manual System (POMS), the U.S. District Court for the District of Connecticut grants the motion for a preliminary injunction, finding that the original trusts are not countable resources because they “do not contain terms providing the beneficiary with any right or authority to direct any payments, and instead empowered the Trustee with the sole discretion to determine when to make a distribution . . . Moreover, the Predecessor Trusts contained a valid spendthrift clause . . . In short, if a trust contains a spendthrift clause, the beneficiary has no legal right or authority to access the trust principal, and, therefore, it is not counted as an available resource for SSI, and consequently Medicaid, eligibility purposes.”

For the full text of this decision, click here.

Medicaid Agency Must Adopt Probate Court Order of Support Made Prior to Application

January 13, 2016

A Connecticut trial court rules that a probate court’s order of support to a community spouse issued prior to a Medicaid application has clear priority over the state Medicaid agency’s subsequent calculation of the applicant’s minimum monthly maintenance needs allowance (MMMNA).  Valliere v. Bremby (Conn. Super. Ct., No. HHBCV156027650S, Nov. 25, 2015) (unpublished).

Marjorie Valliere entered a nursing home on November 24, 2012. Nearly four months later, her daughter and conservator applied to the probate court for an order of spousal support for Ms. Valliere’s husband, Paul Valliere, who lived in the community.  On June 25, 2013, the probate court ordered that Ms. Valliere’s total net income of $1,170.33 be paid to Mr. Valliere as monthly support. On July 13, 2013, Ms. Valliere applied to the Connecticut Department of Social Services for Medicaid assistance.  The Department granted benefits but calculated her MMMNA and found that rather than providing her husband with a community spouse allowance (CSA) she was required to contribute $898.45 from her income toward her cost of care. After the determination was upheld at a fair hearing, Mr. Valliere and his daughter appealed to court, arguing that the Department erred in applying the MMMNA calculation rather than adoptiing the probate court order.

The Superior Court of Connecticut reverses the Department’s decision. The court rules that where a court order is issued before a Medicaid application, “both the statutory scheme and the department’s policy manual provide for the mandatory adoption of and deference to [the] prior court order setting the CSA in lieu of the MMMNA calculation standard.”  The court finds that the Department’s claim that it may ignore the court order because it is the sole state agency tasked with administering the Medicaid program “an absurd and untenable position.”

For the full text of this decision, click here.