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Special Needs Trust Created By Amending Terms of Existing Trust Did Not Require Medicaid Payback Provision

Moses Ratowsky established a trust for the benefit of his 20-year-old grandson, Daniel Schreiber, the terms of which allowed Daniel to withdraw the entire principal at age 21. Daniel was disabled and received Medicaid and Social Security income. Having the right to withdraw the principal of the original trust would cause the entire trust corpus to be considered an available resource, thereby disqualifying Daniel from receiving the above-mentioned needs-based government benefits.

In order to avoid the termination of Daniel’s benefits, the trustees sought authorization from the Surrogate’s Court to exercise a power of appointment of assets from the original trust to a new trust. The new trust would contain the same terms, conditions, beneficiaries, and trustees as the original trust, but would also contain supplemental needs trust protection. Unlike the original trust, the new trust did not give the grandson the right to any income or principal when he turned 21. Indeed, the new trust did not give the grandson the right to withdraw any sum from the trust at any time. Rather, the new trust stated that the grandson shall not have any right or power to assign, encumber, direct, distribute or authorize distribution from this trust. The trustees believed that these amendments to the trust would allow the grandson to continue receiving governmental benefits and, at the same time, permit the assets in the new trust to be used to enhance the grandson’s quality of life.

The New York State Department of Health filed objections, arguing that the new trust would be created with Daniel’s assets, and therefore must contain a Medicaid payback provision pursuant to New York estates and trusts law. Such a payback provision would allow the State, upon the grandson’s death, to recoup all amounts remaining in the new supplemental needs trust up to the total value of all medical assistance paid on behalf of the grandson. Since the new trust did not contain a payback provision, the State argued that the Surrogate’s Court should not approve the exercise of the power of appointment.

The Surrogate Court denied the state’s objections and approved the petition; the state appealed. The order was affirmed on appeal. The appellate court held that a Medicaid payback provision was not required because (1) Daniel did not create the original trust, and (2) at the time the trustees sought to amend the trust the principal was not considered Daniel’s assets under state and federal law.

In case is annexed here Matter of Kroll, 143 A.D.3d 716, 2016 WL 5795354 (N.Y. App. Div. Second Dept. Oct. 5, 2016)

For additional information concerning special needs trusts and disability planning, visit:http://vanarellilaw.com/special-needs-disability-planning/

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Medicaid Applicant’s Right to Use House Placed in Trust Does Not Render Trust Assets Available, Massachusetts High Court Rules

Reversing a lower court, Massachusetts’highest court ruled that two Medicaid applicants’ trusts were not available assets even though the applicants retained the right to use the houses that were put into the trusts.Daley v. Secretary of the Executive Office of Health and Human Services(Mass., No. SJC-12200, May 30, 2017) andNadeau v. Director of the Office of Medicaid(Mass., No. SJC-12205, May 30, 2017).

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. 15CV0188D, Dec. 24, 2015 andNadeau 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 reversed, holding that the trusts were 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 added 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 ruled 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.

The Daley case is annexed here Daley v. Secretary of the Executive Office of Health and Human Services

(This blog post was adapted from a summary of the Daley case posted on the ElderLawAnswers website. Mr.Vanarelli is a founding member of ElderLawAnswers.)

For additional information concerning Medicaid applications and appeals, visit:http://vanarellilaw.com/medicaid-applications-medicaid-appeals/
For additional information concerning Medicaid and public benefits planning, visit:http://vanarellilaw.com/medicaid-public-benefits-planning/

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In Probate Litigation, Fraud Claims Dismissed; Complaint Did Not Even Suggest A Basis For The Requested Relief

Plaintiff Neil Epstein sued Barbara Epstein Petka, claiming that, as a result of her fraud and misrepresentation, the decedent had removed the plaintiff as a beneficiary of his will and living trust. The defendant filed a motion to dismiss in lieu of an answer, claiming that the complaint failed to state a claim pursuant to R. 4:6-2(e). The trial court agreed, finding that the complaint failed to identify the fraud with specificity as required by R 4:5-8(a), and failed to provide dates when the alleged fraud occurred, thus preventing a determination of whether it was barred by the statute of limitations. When plaintiff’s complaint was dismissed for failure to state a claim, he appealed.

The Appellate Division agreed with the trial court. It set forth the standard for determining whether a complaint survives a dismissal motion under R. 4:6-2(e): whether the pleadings even suggest a basis for the requested relief. To make this determination, a court will assess the legal sufficiency of the claim without regard to the plaintiff’s ability to prove the allegations made. Accepting the factual allegations as true, the court will search the complaint to determine whether a cause of action may be gleaned, keeping in mind that legal sufficiency requires allegation of all the facts that the cause of action requires.

In this case, the complaint did not:

The specificity required in a complaint alleging fraud includes some designation as to when the fraud occurred and the content of any alleged misrepresentations. Plaintiff’s complaint made no attempt to even approximate when the conduct occurred during the decedent’s life or the content of the misrepresentations as alleged.

The dismissal was affirmed, without prejudice to the plaintiff’s right to seek leave to file an amended complaint.

A copy of Epstein can be found here Epstein v. Epstein

For additional information concerning probate litigation and will contests, visit:http://vanarellilaw.com/will-contests-probate-litigation-elder-abuse-actions/#iplwc

The post In Probate Litigation, Fraud Claims Dismissed; Complaint Did Not Even Suggest A Basis For The Requested Relief appeared first on Westfield Elder Law Attorney | New Jersey Guardianship Lawyer | Union County NJ 07090.

Ethics Committee Says it’s OK for a Judge to Tweet

In a recent opinion, the MassachusettsCommittee on Judicial Ethicsruled that a judge may ethically maintain a Twitter account as long as the judge complies with theCode of Judicial Conductand the judge is cautious about selecting accounts to follow on Twitter.

Theopinionsaid that the judge requested the Committee’s advice concerning the judge’s continued use of Twitter.

The Committee found that the judge maintained an unrestricted account available to the public, that the judge posted publicly as a judge, and that the accounts the judge followed and the identities of the judge’s followers were visible to the public.

When using Twitter, the Committee said that judges must comply with their obligations under theCode of Judicial Conduct:

[E]ach judge who uses Twitter must err on the side of caution and be aware that posts a judge-user considers neutral may nonetheless lead a reasonable person to question the judge’s impartiality.

According to the Committee, when a judge is posting publicly as a judge, the judge must be exceptionally cautious because the public may perceive the judge’s communications to have the imprimatur of the courts:

[A] public, unrestricted Twitter account of an identified judge may be used only for informational and educational purposes. If the judge so desires, the account also may reflect who the judge is as a person, as well as a judge, so long that the judge is careful not to implicitly or explicitly convey the judge’s opinions on pending or impending cases, political matters, or controversial or contested issues that may come before the courts. In addition, as to each piece of information revealed by the judge’s Twitter account (whether it is a tweet, a retweet, a like, the identity of an account that the judge follows, or the identity of an account that follows the judge) the judge must consider whether it would cause a reasonable person to question the judge’s impartiality.

The opinion went on to examine the judge’s actual tweets, categorizing and discussing them according to the nature of their content and their consistency with the Code of Judicial Conduct:

  1. Posts that announce bar events and other news of general interest to the bar.Many of these posts, the committee found, were retweets from bar associations, law schools, courts, and other organizations and institutions. These posts were found to be consistent with the code.
  2. Posts that advise trial lawyers on trial practice. Purely educational posts are consistent with the Code, provided a reasonable person would not perceive them as demonstrating personal bias or improper comment on a pending case.
  3. Posts that report on cases decided by other courts, including the Massachusetts Supreme Judicial Court and the United States Supreme Court. The judge’s tweets often reported court decisions. Reporting court decisions is consistent with the Code, the committee said, but only if the reports do not compromise or appear to compromise [the judge’s] impartiality. In other words, the Committee ruled that the judge must not retweet or link to case reports from persons or organizations with legal opinions that are clearly on one side of contested legal issues.
  4. Posts intended to reveal the existence of racism and implicit bias in the courts.The committee said, Posts must serve a legitimate educational or informational purpose, and [the judge] must avoid posts that individually or as a pattern would lead a reasonable person to conclude [the judge has] a predisposition or bias that calls [his/her] impartiality into question.
  5. Posts that detract from the dignity of the judiciary and the court system.The committee said, A reasonable person may perceive these posts to be needlessly offensive, or as making light of behavior by litigants who may have mental health problems. As a result, the committee said, Posts of this nature must be avoided.
  6. Posts that include photographs from the courtroom or lobby.The judge posted photographs that appeared to show litigants, attorneys, court personnel and judges. The committee found that privacy and safety concerns require that the judge obtain consent from any person whose image he posted online.
  7. Posts that reflect pride in the judge’s personal characteristics, background and achievements. The committee found these posts were found to be consistent with the Code. It is long-settled that a judge’s gender, race, or other personal characteristics are not grounds for a reasonable person to question the judge’s ability to interpret and apply the law fairly and impartially.

The opinion also addressed the issue of the Twitter accounts followed by the judge. The concern here, the committee said, is that the list of accounts the judge followed was publicly accessible to anyone. Consequently, you must be cautious when selecting accounts to follow and avoid, for example, following the accounts of political candidates or parties.

In conclusion, the Committee found that in some respects [the judge’s] current use of Twitter is consistent with the Code [of Judicial Conduct], but in others, it is not.

You can read theethics opinion here //docs.google.com/viewer?url=http%3A%2F%2Fvanarellilaw.com%2Fwp-content%2Fuploads%2F2017%2F01%2FMassachusetts-CJE-Opinion-No.-2016-09.pdf&hl=en_US&embedded=true

Download (PDF, 267KB)

The Law Office of Donald D. Vanarelli website:http://vanarellilaw.com/

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