(The 15th Annual Elder and Disability Law Symposium was held on October 3, 2012 at the New Jersey Law Center, in New Brunswick, NJ. This year, as in the past few years, I gave the case law update at the opening plenary session by summarizing the top ten (10) or so elder and disability law cases decided in 2011-2012. I’ve reproduced the presentation below for readers of this blog. Each hyper-linked case name takes the reader to my blog article about the case.)

Opening Remarks

October 3, 2012

Elder and Disability Law Symposium

Again this year, we’ve gotten a number of written decisions touching on our areas of practice. Many of these are unpublished decisions, but they provide welcome guidance in these areas, where practitioners often wish for a more comprehensive body of case law to guide them.

The following are my “Top Ten” (or so) cases of the year, in chronological order.

(1)     Bond v. Bond (Unpublished)

2011 N.J.  Super. Unpub. LEXIS 3082 (Dec. 22, 2011), certif. granted, 201 N.J. 217 (May 2012).

The Appellate Division considered whether a non-custodial parent’s creation of a special needs trust (“SNT”) can justify the elimination of that parent’s obligation to pay child support. The parties’ property settlement agreement (“PSA”) obligated the father to pay $50,000 per year in child support for each child, regardless of the mother’s income. Mr. Bond was claiming that his financial circumstances had declined in recent years, his 2008 gross earned income was $4,924,469. It found that the trial court had “perceptively concluded that this was primarily an application to terminate child support.” Although it concluded that the non-custodial parent “may utilize a special needs trust to take advantage of government programs to lessen the burden on the parent to provide support and medical assistance,” it held that the creation of such a trust would not justify the non-custodial parent’s concurrent application seeking to eliminate his obligation to pay child support.

(2)     Pfeifer v. Langone (Unpublished)

2012 N.J. Super. Unpub. LEXIS 429 (Feb. 29, 2012).

The Appellate Division ruled that a punitive damages award would be based upon a trustee’s breach of fiduciary duty, thereby rejecting the defendant/trustee’s claim that punitive damages could not be awarded in the absence of proof of fraud or collusion. The court reasoned that the trustee was obliged to administer the trust solely for the benefit of the beneficiaries. “Whether conceptualized as a surcharge against the trustee’s interest, or as punitive damages, the trial court correctly determined that the trustee’s conduct constituted both fraud and a breach of her fiduciary duty.”

(3)     K.L. v. DMAHS (Unpublished)

2012 N.J. Super. Unpub. LEXIS 515 (Mar. 9, 2012).

The Appellate Division ruled that a Medicaid recipient’s community spouse is not entitled to an increase in her minimum monthly maintenance needs allowance (MMMNA) because she did not demonstrate that her financial duress was caused by exceptional circumstances. The wife had argued that she was entitled to an increase to help pay for repairs due to flood damage, pay premiums on four life insurance policies, and cover expenses such as cellphone and Internet access. However, although it held that flood damage is not an exceptional circumstance because it should be covered by homeowner’s insurance, it noted that the wife’s MMMNA may be adjusted if she is not fully reimbursed by insurance. The court also noted that the payment of life insurance policies, legal fees to file a Medicaid application, expenses for cell phones and internet are not extraordinary circumstances, and that she failed to show that her medical and dental problems were exceptional.

(4)     In re Estate of DeFrank (Unpublished)

2012 N.J. Super. Unpub. LEXIS 886 (Ch. Div. Apr. 20, 2012) (Judge Jacobsen).

Although the probate judge concluded that certain jointly held assets of the decedent passed outside probate, it also allowed for the possibility that the claims of a surviving joint owner of estate assets could be defeated, if the opponent could show that (1) the decedent did not intend to leave the assets to the surviving joint owner; or (2) a confidential relationship existed.

(5)     Veterans for Common Sense v. Shinseki

678 F.3d 1013 (9^th Cir. May 7, 2012).

The 9^th Circuit Court of Appeals, by a vote of 10-1, rejected a lawsuit that sought to force the VA to overhaul its medical program for mental health care and reversed an earlier ruling that would have forced the government to speed up treatment requests and benefit claims. “Such responsibilities are left to Congress and the Executive, and to those specific federal courts charged with reviewing their actions ….”

(6)     Beim v. Hulfish (Unpublished)

2012 N.J. Super. LEXIS 84 (App. Div. May 29, 2012).

The Appellate Division allowed wrongful death plaintiffs to produce experts and include, as an element of damages, the additional federal estate taxes the estate had to pay resulting from the decedent’s premature death in 2008 (as opposed to a later year, because of changes to the estate tax laws).

(7)     Manahawkin Convalescent Center v. O’Neill

          426 N.J. Super. 143 (May 31, 2012).

The Appellate Division held that a nursing home resident’s adult child who signed a nursing home admission agreement as the “Responsible Party” can be sued in his/her individual capacity for monies owed to the facility for services rendered to the resident if the adult child fails to use the resident’s financial resources to pay for care provided by the facility.

The court held that, contrary to plaintiff’s claim, defendant was not attempting to hold plaintiff personally financially liable for her mother’s debt in contravention to the Nursing Home Act (NHA), N.J.S.A. 30:13-1 to -17 just because the facility filed a lawsuit against plaintiff as the responsible party.

(8)     Lewis v. Alexander

685 F.3d 325 (3d Cir. June 20, 2012).

The Third Judicial Circuit held that laws passed by the State of Pennsylvania designed to regulate special needs trusts (SNTs) (in this case, “pooled trusts”), which placed greater restrictions on the SNTs than were contained in federal law governing SNTs “transgress[ed] federal intent” and were preempted by federal law.

The appeals court found that “Congress’ intent was … to shelter special needs trusts from having any impact on Medicaid eligibility.” However, it also found that the enforcement provision of the Pennsylvania law, when used to enforce provisions not otherwise preempted by federal law, was a reasonable exercise of the State’s authority to regulate trusts.        

(9)     In re Brandes Trusts (Unpublished)

 2012 N.J. Super. Unpub. LEXIS 1499 (June 26, 2012).

A mother/guardian ad litem brought litigation against the trustee of two family trusts established for the benefit of her son. After one of those lawsuits was dismissed, the trustee sought fees incurred in defending the litigation. Based upon the fee claim, the Chancery Court removed the mother as guardian ad litem, finding that the mother was in a position of conflict that justified her removal.

In reversing the trial court, the Appellate Division found that the potential for an award of attorney fees against the mother, the trust, or both, was insufficient grounds for removal of a guardian ad litem, which must be “for good cause and based on clear and convincing evidence of misconduct or inability to serve the best interests of the ward.”

(10)   In re Estate of Ehrlich

427 N.J. Super. 64 (App. Div. June 29, 2012).

The Appellate Division found that an unexecuted copy of a typed original will “sufficiently represents decedent’s final testamentary intent to be admitted into probate under N.J.S.A. 3B:3-3.”

The decedent, Richard Ehrlich, was a trust and estates attorney. Following his death, the proffered will was discovered in a drawer in his home. The document was a copy of a detailed document entitled “Last Will and Testament,” and was typed on his law firm’s traditional will paper. The document was unsigned, but contained the decedent’s handwritten note that the original had been mailed to his executor (who predeceased the decedent, never having returned the original).

The Ehrlich court rejected the dissent’s position that the document must be signed before a court will consider whether there is clear and convincing evidence of intent.

(11)   In re Estate of Schmidt (Unpublished)

2012 N.J. Super. Unpub. LEXIS 1649 (App. Div. July 11, 2012).

In Schmidt, the defendant, who was the decedent’s nephew, held a power of attorney for his aunt. After the aunt’s death, the decedent’s niece filed a complaint challenging the nephew’s actions as agent under the POA.

The probate judge had found that, although the nephew was an “amateurish” and poor record-keeper, his actions had been for the benefit of the decedent, and that the plaintiff/niece had attempted to capitalize on his poor record-keeping, but had failed to establish her claims at the hearing. The probate court rejected the niece’s fee application, concluding that “the estate was not at all enhanced by the years’ long unsuccessful litigation effort.” That decision was affirmed on appeal.

(12)   In re Will of Schenecker (Unpublished)

2012 N.J. Super. Unpub. LEXIS 1901 (App. Div. Aug. 7, 2012).

The Appellate Division affirmed the denial of counsel fees to an unsuccessful contestant in a probate litigation. After the decedent’s daughter was unable to locate the decedent’s original will, she filed a complaint seeking to have a photocopy of the will admitted to probate. The decedent’s widow contested the application, alleging that the decedent had destroyed the will prior to his death. Following a hearing, the probate judge found by clear and convincing evidence that the decedent had not destroyed or revoked his will, and found the widow’s testimony regarding the alleged will destruction was not credible. The trial court then denied the widow’s fee applications, and was affirmed. The Appellate Division noted that a court is permitted to award counsel fees in probate actions “if the contestant had reasonable cause for contesting the validity of the will.”

(13)   Lopes v. Department of Social Services

          (2nd Cir., No. 10-3741-cv, Oct. 2, 2012).

In this case, the U.S. Court of Appeals for the Second Circuit upheld a district court ruling that Connecticut cannot treat the income stream from an annuity as an available asset for the purposes of Medicaid eligibility.