Below, in chronological order, is ElderLawAnswers’ annual roundup of the top 10 elder law decisions for the year just ended, as measured by the number of readers who “clicked through” to the full story in their Weekly and Monthly e-letters. Almost all the cases hinged on the interpretation of state or federal Medicaid law. Those purchasing annuities or transferring property in exchange for a promissory note did well last year, with no fewer than six favorable rulings among the top 10. Two trust decisions were not so favorable to the applicants.
1. Annuity Benefitting Medicaid Applicant Need Not Name State as Remainder Beneficiary A Georgia court of appeals holds that while annuities benefitting a Medicaid applicant’s spouse must name the state as a remainder beneficiary to avoid a transfer penalty, annuities benefitting the Medicaid applicant do not. Cook v. Bottesch (Ga. Ct. App., Nos. A13A0006, A12A2268, A12A2269, A12A2506, March 26, 2013).
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2. U.S. Court Rules Promissory Notes Are “Valid Form of Medicaid Planning” A Medicaid applicant who transferred property in exchange for a promissory note is eligible for coverage because the note is not a resource or a trust-like device and does not subject the applicant to a transfer penalty, according to a U.S. district court, which finds that a promissory note “is a valid form of Medicaid planning.” Lemmons v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV–12–1075–C, March 21, 2013).
3. Grandchildren Liable for Grandmother’s Nursing Home Stay After She Transferred Money to Them A New York trial court rules that a nursing home resident’s grandchildren are liable for fraudulent conveyance after the grandmother annuitized several annuities to them, rendering her insolvent and ineligible for Medicaid. Chapin Home for the Aging v. Heather (N.Y. Sup. Ct., No. 25327/2010, April 23, 2013).
4. Annuities Bought for Medicaid Applicant’s Spouse Are Neither Income Nor Resource A U.S. district court holds that the annuities a Medicaid applicant purchased for his wife cannot be considered as either assets or income when determining Medicaid eligibility. Jackson v. Selig (U.S. Dist. Ct., E.D. Ark., No. 3:10–CV–00276–BRW, March 13, 2013).
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5. Medicaid Applicant’s Irrevocable Trust Is Available Asset Because of Loan Provision A Minnesota appeals court rules that a Medicaid applicant’s irrevocable trust is an available asset for Medicaid eligibility purposes because the trust gives the applicant the right to borrow money from the trust without interest. Edholm v. Minnesota Dept. of Human Services (Minn. Ct. App., No. A12-1623, June 17, 2013).
6. Parents Acting Under Power of Attorney Did Not Create Valid Special Needs Trust A U.S. District Court holds that a special needs trust is not valid because it was created by the parents of the beneficiary while the parents were acting as agents under a power of attorney. Draper v. Colvin (U.S. Dist. Ct., D. S.D., No. 12-4091-KES, July 10, 2013).
7. 8th Circuit Rules Spouse’s Annuity Is Not an Available Resource In a case argued by ElderLawAnswers member Gregory C. Larson and Medicaid litigator René H. Reixach, Jr., a federal appeals court holds that an annuity purchased by a Medicaid applicant’s spouse after the applicant entered a nursing home cannot be counted as an available resource. Geston v. Anderson (8th Cir., No. 12-2224, Sept. 10, 2013).
8. Transfer from Trust to Medicaid Applicant’s Spouse Was Improper Transfer In a case argued by ElderLawAnswers member Thom L. Cooper and an associate, an Ohio appeals court holds that the transfer of a house from a revocable trust to a Medicaid applicant and then from the Medicaid applicant to the applicant’s spouse was an improper transfer because it increased the spouse’s community spouse resource allowance. Atkinson v. Ohio Department of Job and Family Services (Ohio Ct. App., 5thDist., No. 13CA4, Sept. 27, 2013).
9. 10th Circuit Rules Promissory Note Is Not Available Resource for Medicaid Eligibility Purposes Reversing a district court, a U.S. appeals court rules that a promissory note held by an Oklahoma Medicaid applicant’s wife is not an available resource because the note cannot be transferred or sold. Gragert v. Lake (10th Cir., No. 12-6137, Oct. 8, 2013).
10. Community Spouse’s Purchase of Annuity Before Medicaid Determination Is Not Improper Transfer In a case argued by Ohio ElderLawAnswers member attorney William Browning, the U.S. Court of Appeals for the Sixth Circuit rules that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer and that the annuity does not need to name the state as a remainder beneficiary. Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013).