NY Court Rules That Guardian May Conduct Medicaid Planning on Behalf of His Great Aunt

A New York trial court allows a guardian to conduct Medicaid planning on behalf of his ward, his great aunt, but requires that gifted money be put into a trust for the aunt’s personal needs. in-matter-of-ml (N.Y. Sup. Ct., No. 924XX/08, June 2, 2009).

Matthew S. was appointed guardian of his great aunt, M.L., who was in a nursing home. The guardian petitioned the court to allow him to gift and loan M.L.’s assets in order to conduct Medicaid planning.

The guardian proposed gifting a portion of M.L.’s assets to her niece, who was the sole beneficiary of her will, and loaning the remaining assets to the guardian. The guardian would repay the loan to cover M.L.’s nursing home expenses during the penalty period incurred by the transfer. M.L.’s niece would use the assets gifted to her to cover M.L.’s personal needs.

The Supreme Court of New York approved the petition, but required that the niece create a trust for M.L.’s benefit once the transfer of assets were complete. According to the court, a trust is the only way to ensure that the niece uses the assets gifted to her to provide for M.L.’s personal needs.

In New Jersey, the concept of “Medicaid planning,” involving the strategic transfer of assets aimed at hastening an individual’s eligibility for Medicaid, has been viewed as a prudent estate planning technique by which an individual may preserve assets for his or her loved ones since 2004. In that year, our state Supreme Court decided the seminal estate planning / guardianship case entitled In re Keri, 181 N.J. 50 (2004). In the Keri case, an adult child sought guardianship of his mother and her estate and proposed to gift some of her assets to himself and his brother so that mother could qualify for Medicaid while in a nursing home. Reversing lower court decisions, the state Supreme Court ruled, for the first time in New Jersey, that the mother’s assets could be transferred to her children as part of an estate plan to help her qualify for government nursing home benefits. This ruling was characterized by the Star Ledger newspaper as having “broad implications for those with elderly relatives suffering from Alzheimer’s and other kinds of dementia…”. Donald D. Vanarelli, Esq., owner of this weblog, represented the plaintiff, Richard Keri, in the In re Keri case.