Massachusetts Supreme Judicial Court to hear oral arguments in two Medicaid eligibility cases involving irrevocable trusts

On January 5, 2017, the highest court in Massachusetts will hear oral arguments in two cases concerning the use of irrevocable trusts in Medicaid planning and denials of long-term care benefits. A synopsis of each case is provided below:scales-of-justice

Nadeau v. Thorn– SJC 12205

In 2002, the applicant created and funded an irrevocable trust with his primary residence. He retained the right to use and occupy the residence held in the trust. The trust provided no circumstances under which the applicant could receive a distribution of trust principal. The Hearing Officer concluded, and the superior court later affirmed, that the trust was an entirely countable resource as a result of the use and occupancy interest. Under Massachusetts trust law, the use and occupancy interest provides no ability for the holder to invade trust principal. The hearing officer’s finding was made without any determination that any portion of the trust’s principal could be paid to the applicant for benefits, which is required by the Federal Medicaid statute in order for the trust to be deemed a countable resource.

Daley v. Sudders– SJC 12200

In this case, the applicant retained a life estate in a deed transferring a residence into an irrevocable trust. As in Nadeau, the Hearing Officer found that the life estate rendered the assets of the trust “available” and thus countable resources relative to the applicant’s eligibility for long-term care benefits from MassHealth. The superior court also affirmed this decision. This decision is notable in that it concludes that a life estate can render the assets of an irrevocable trust countable to an applicant for benefits even where no trust principal can be paid to the applicant. A life estate deed is a separate entity from the trust, and the appeal argues that it was an error of law for the superior court to uphold MassHealth’s determination that retaining a life estate in a deed somehow rendered the corpus of the irrevocable trust a countable resource to the applicant.

The National Academy of Elder Law Attorneys (NAELA) submitted an amicus brief to the SJC earlier this month regarding both cases. Additionally, the Massachusetts Chapter of NAELA has submitted an amicus brief in the Nadeau case. The Real Estate Bar Association (REBA) has submitted an amicus brief relative to the Daley case. The cases have generated much interest within the elder law and estate planning bars, and the decisions are widely anticipated.

I will be presenting the oral argument in the Nadeau matter before the SJC. We will post an update regarding the oral arguments after they occur next month.



About Lisa Neeley

Lisa is an attorney in the Firm's Trusts and Estates Group. She focuses her practice on elder law, estate, and special needs planning matters.   Lisa assists clients in the preparation and filing of complex MassHealth applications, from the planning and filing process through representation for any necessary appeals. In conjunction with her MassHealth expertise, Lisa has represented clients in appeal hearings regarding benefit eligibility issues before the Board of Hearings, Superior Court, and Massachusetts Appeals Court. In addition, Lisa has expertise in assisting elderly and disabled clients with the process of applying for community MassHealth benefits to enable them to remain in their homes while receiving care.    Lisa routinely assists clients of all ages with the preparation of estate and long-term care planning documents, including powers of attorney, health care proxies, wills, and trusts. She regularly appears in Probate Court to represent individuals and families in guardianship, conservatorship, and estate administration matters. Lisa frequently speaks to local senior centers, hospitals, nursing homes, and community groups on estate and long-term care planning topics. She is an active member of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA). In 2016, Lisa was a recipient of the John Ford litigation advocacy award by the National Academy of Elder Law Attorneys (NAELA) in recognition of her dedication and commitment to people as they age and for people with special needs.
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