Testamentary Trust Qualifies As SNT Despite Support Language
The Supreme Court of Connecticut rules that the state Department of Social Services improperly denied a Medicaid application after counting assets in a testamentary trust that should have been considered exempt because, the court holds, the trust was a discretionary supplemental needs trust, not a support trust. Pikula v. Department of Social Services (Conn., No. SC 19533, May 10, 2016).
John Pikula died in 1991, leaving behind a testamentary trust for the benefit of his daughters. The trust gave the trustee the ability to use the trust income and principal for the daughters “as the trustee may deem advisable for [their] maintenance and support”. In 2012, one of Mr. Pikula’s daughters, Marian Pikula, entered a long-term care facility and applied for Medicaid. The Department of Social Services (DSS) denied Ms. Pikula’s application, alleging that the assets in the testamentary trust constituted a countable support trust.
Ms. Pikula appealed DSS’s decision, arguing that her father had intended to create a supplemental needs trust and that the discretionary language in the trust met the requirements of such a trust because Ms. Pikula could not compel payments from the trust for her support. She was denied at an administrative level and on appeal to the trial court. The Connecticut Supreme Court transferred Ms. Pikula’s appeal from the intermediate appellate court.
The Supreme Court of Connecticut reverses the trial court. The court determines that “the fact that the trustee is only required to use as much income as he ‘may deem advisable’ to provide for [Ms. Pikula’s] maintenance, indicates that the testator intended for the trustee to have complete discretion in determining what, if any, of the income was to be used for [Ms. Pikula’s] maintenance.” The court goes on the analyze the circumstances behind the creation of the trust, and it reasons that because the trust was established with a modest amount of money, it was clearly not intended to be used for Ms. Pikula’s long-term support.
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Reversing a lower court, a Michigan appeals court rules that under state regulations a Medicaid applicant’s payments to a non-relative caregiver subjected the applicant to a penalty period because the caregiver did not have a written contract and a doctor had not recommended the service be provided. Jensen v. Department of Human Services (Mich. Ct. App., No. 319098, Feb. 19, 2015).
Jason Jensen hired a non-relative caregiver for his grandmother, Betty Jensen, who suffered from dementia. Mr. Jensen and the caregiver had an informal agreement and no contract was signed, but Mr. Jensen paid the caregiver a total of $19,000 from Ms. Jensen’s assets over the course of the months she worked for Ms. Jensen. When Ms. Jensen’s condition worsened, she entered a nursing home and applied for Medicaid. The state established a penalty period, holding that the payments to the caregiver were an unlawful transfer. Ms. Jensen died before the penalty period ended.
Mr. Jensen appealed, but the state upheld the decision. Under state regulations, payments to caregivers are considered “divestments” and transfers for less than fair market value unless there is a signed contract and a doctor has recommended in writing that the services be provided, among other requirements. Mr. Jensen appealed to court, and the trial court reversed, holding that the regulation requiring that a contract be in writing applied only to relative caregivers. The state appealed.
The Michigan Court of Appeals reverses, holding that the trial court improperly interpreted the regulations and that the penalty period was appropriate. According to the court, because there was no written contract and no written doctor’s recommendation for the services, the payments to the caregiver were a divestment. The court notes that “it does not appear from the factual record that [Mr.] Jensen overpaid for [the caregiver’s] services, or hired [the caregiver] unnecessarily. If we were not bound by the plain language of [the regulations], and were we permitted de novo review of the lower tribunals’ factual considerations, we would reach quite a different result.”
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Brian A. Raphan