In re Keri

Supreme Court of New Jersey.

In the Matter of Mildred KERI
a Mentally Incompetent Person.

Argued Oct. 20, 2003.

Decided Aug. 5, 2004.

 

Background: Adult child sought guardianship of his mother and her estate and proposed to sell her house and retain part of proceeds as gift to himself and his brother so that mother could qualify for Medicaid while in nursing home. The Superior Court, Chancery Division, Probate Part, Middlesex County, granted guardianship and authorized sale of home, but refused to authorize Medicaid spend-down plan. Child appealed. The Superior Court, Appellate Division, Coburn , J.A.D., 356 N.J.Super. 170, 811 A.2d 942, affirmed in part, reversed in part, and remanded. Certification was granted.
Holding: The Supreme Court, Poritz, C.J., held that the Medicaid spend-down plan was permissible.
Reversed and remanded.

West Headnotes

[1] Mental Health 257A  259
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak258 Sales, Transfers, and Encumbrances by Guardian; Order of Court
257Ak259 k. Authority to Sell or Convey in General. Most Cited Cases
When managing the estates of incompetent persons, including the exercise of the power to make gifts, courts must find that the proposed action is in the best interests of the ward and that any gifts proposed are such as the ward might have been expected to make. N.J.S.A. 3B:12-50, 3B:12-58.
[2] Mental Health 257A  216
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak216 k. Rights and Powers of Guardian or Committee in General. Most Cited Cases
Mental Health 257A  259
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak258 Sales, Transfers, and Encumbrances by Guardian; Order of Court
257Ak259 k. Authority to Sell or Convey in General. Most Cited Cases
The statutory provisions on managing the estates of incompetent persons incorporate and reconcile the best interests standard with the common law equitable doctrine of substituted judgment; the guardian may make gifts in the same manner as the incompetent would if able to function at full capacity (substituted judgment) only when the estate contains the resources necessary for the benefit of the ward (best interests). N.J.S.A. 3B:12-50, 3B:12-58.
[3] Mental Health 257A  259
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak258 Sales, Transfers, and Encumbrances by Guardian; Order of Court
257Ak259 k. Authority to Sell or Convey in General. Most Cited Cases
The guardian must establish five criteria to make a gift of ward’s property: (1) the mental and physical condition of the incompetent are such that the possibility of her restoration to competency is virtually nonexistent; (2) the assets of the estate of the incompetent remaining after the consummation of the proposed gifts are such that, in the light of her life expectancy and her present condition of health, they are more than adequate to meet all of her needs in the style and comfort in which she now is (and since the onset of her incompetency has been) maintained, giving due consideration to all normal contingencies; (3) the donees constitute the natural objects of the bounty of the incompetent by any standard; (4) the transfer will benefit and advantage the estate of the incompetent by a reduction of death taxes; (5) there is no substantial evidence that the incompetent, as a reasonably prudent person, would, if competent, not make the gifts proposed in order to effectuate a saving of death taxes. N.J.S.A. 3B:12-50, 3B:12-58.
[4] Mental Health 257A  216
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak216 k. Rights and Powers of Guardian or Committee in General. Most Cited Cases
Mental Health 257A  237
257A Mental Health
257AIII Guardianship and Property of Estate
257AIII(B) Property and Management of Mentally Disordered Person’s Estate
257Ak237 k. Individual Interest in Transactions. Most Cited Cases
When legal guardians have satisfied the statutory requirements, they may engage in Medicaid planning even when the guardians themselves may be the recipients of transfers from the wards’ assets. N.J.S.A. 3B:12-50, 3B:12-58.
[5] Health 198H  471(3)
198H Health
198HIII Government Assistance
198HIII(B) Medical Assistance in General; Medicaid
198Hk466 Eligibility for Benefits
198Hk471 Resources
198Hk471(3) k. Deductions and Allowances in General. Most Cited Cases
A presumption exists in favor of approving a guardian’s Medicaid spend-down proposal for the ward’s assets on the ground that a reasonable and competent person would prefer that the costs of care be paid by the state, as opposed to the ward’s family. N.J.S.A. 3B:12-50, 3B:12-58; N.J.A.C. 10:71-3.1, 10:71-3.4, 10:71-3.9(a)1, 10:71-4.5(b).
[6] Health 198H 512(5)
198H Health
198HIII Government Assistance
198HIII(B) Medical Assistance in General; Medicaid
198Hk506 Judicial Review; Actions
198Hk512 Scope of Judicial Review
198Hk512(5) k. Substantial Evidence. Most Cited Cases
The presumption in favor of approving a guardian’s Medicaid spend-down proposal for the ward’s assets can be overcome only with substantial evidence. N.J.S.A. 3B:12-50, 3B:12-58; N.J.A.C. 10:71-3.1, 10:71-3.4, 10:71-3.9(a)1, 10:71-4.5(b).
[7] Health 198H  471(7)
198H Health
198HIII Government Assistance
198HIII(B) Medical Assistance in General; Medicaid
198Hk466 Eligibility for Benefits
198Hk471 Resources
198Hk471(7) k. Homes; Real Estate. Most Cited Cases
Medicaid spend-down plan involving guardian’s sale of house belonging to ward, his mother, equal gifts of proceeds to guardian and his brother, and placement of ward in nursing home was permissible for ward suffering from irreversible dementia; the plan provided adequate funding for nursing home care during the triggered period of Medicaid ineligibility, the guardian and brother were the natural objects of the bounty of the incompetent, the proposed transfer of assets would benefit and advantage the estate of the incompetent, and no evidence indicated that the ward would have disapproved the plan. Social Security Act, §§ 1819, 1917(a)(1)(B), 1919, as amended, 42 U.S.C.A. §§ 1395i-3, 1396p(a)(1)(B), 1396r; N.J.S.A. 26:2H-12.8, subds. j, p, 3B:12-49, 3B:12-50, 3B:12-58, 3B:12-62, 30:13-5, 30:13-5, subd. j; 42 C.F.R. §§ 483.1 to 483.100; N.J.A.C. 10:71-3.1, 10:71-3.4, 10:71-3.9(a)1, 10:71-4.5(b), 10:71-4.10(a).
[8] Health 198H  471(1)
198H Health
198HIII Government Assistance
198HIII(B) Medical Assistance in General; Medicaid
198Hk466 Eligibility for Benefits
198Hk471 Resources
198Hk471(1) k. In General. Most Cited Cases
(Formerly 198Hk471(5))
So long as the law allows competent persons to engage in Medicaid planning, incompetent persons, through their guardians, should have the same right, subject to the legal constraints. Social Security Act, § 1917(a)(1)(B), as amended, 42 U.S.C.A. § 1396p(a)(1)(B); N.J.S.A. 3B:12-49, 3B:12-50, 3B:12-58, 3B:12-62, 30:13-5, 30:13-5, subd. j; N.J.A.C. 10:71-3.1, 10:71-3.4, 10:71-3.9(a)1, 10:71-4.5(b), 10:71-4.10(a).
**910 *52 Donald D. Vanarelli, Westfield, argued the cause for appellant, Richard Keri (Mr. Vanarelli, attorney; Mr. Vanarelli and Whitney W. Bremer, on the brief).
*53 Linda S. Ershow-Levenberg, Clark, argued the cause for amicus curiae New Jersey Chapter of National Academy of Elder Law Attorneys (Fink, Rosner, Ershow-Levenberg, attorneys).
Gwen E. Orlowski argued the cause for amicus curiae Legal Services of New Jersey (Melville D. Miller, Jr., President, attorney; Mr. Miller and Ms. Orlowski on the brief).
Peggy Sheahan Knee argued the cause for amicus curiae New Jersey State Bar Association (Karol Corbin Walker, President, attorney; Ms. Sheahan Knee, Sharon A. Balsamo, Janet B. Lurie, Sharon Rivenson Mark and Shirley B. Whitenack on the brief).
Edward H. Tetelman, Acting Public Guardian, argued the cause for amicus curiae Office of the Public Guardian for Elderly Adults (Mr. Tetelman, attorney; Mr. Tetelman, Joseph A. Fontana and Helen Dodick, on the briefs).
Daniel J. Jurkovic, Rutherford, submitted a brief on behalf of amici curiae National Academy of Elder Law Attorneys and Guardianship Association of New Jersey, Inc. (Mr. Jurkovic, attorney; Mr. Jurkovic, Sharon Rivenson Mark and Mary E. WanderPolo, on the brief).
Chief Justice PORITZ delivered the opinion of the Court.
This case presents the question whether self-sufficient adult children who serve as their incompetent parents’ legal guardians may transfer to themselves all or part of their parents’ assets in order to hasten their parents’ eligibility for Medicaid benefits. We hold that when certain criteria are satisfied, they may, in order to effectuate**911 a decision their parents would have made if competent.

Important Cases: In re Keri Continued >