The annual roundup of the top 10 11 elder law decisions from across the country for 2013 as prepared by staff at the ElderLawAnswers website is reproduced below. Almost all the cases hinged on the interpretation of state or federal Medicaid law.  Those purchasing annuities or transferring property in exchange for a promissory note did well last year, with no fewer than six favorable rulings among the top 10.  Two trust decisions were not so favorable to the applicants.

1. Annuity Benefiting Medicaid Applicant Need Not Name State as Remainder Beneficiary

A Georgia court of appeals held that while annuities benefiting a Medicaid applicant’s spouse must name the state as a remainder beneficiary to avoid a transfer penalty, annuities benefiting the Medicaid applicant do not. Cook v. Bottesch (Ga. Ct. App., Nos. A13A0006, A12A2268, A12A2269, A12A2506, March 26, 2013).

 2. U.S. Court Rules Promissory Notes Are “Valid Form of Medicaid Planning”

A Medicaid applicant who transferred property in exchange for a promissory note is eligible for coverage because the note is not a resource or a trust-like device and does not subject the applicant to a transfer penalty, according to a U.S. district court, which found that a promissory note “is a valid form of Medicaid planning.” Lemmons v. Lake (U.S. Dist. Ct., W.D. Okla., No. CIV–12–1075–C, March 21, 2013).

3. Grandchildren Liable for Grandmother’s Nursing Home Stay After She Transferred Money to Them

A New York trial court ruled that a nursing home resident’s grandchildren are liable for fraudulent conveyance after the grandmother annuitized several annuities to them, rendering her insolvent and ineligible for Medicaid. Chapin Home for the Aging v. Heather (N.Y. Sup. Ct., No. 25327/2010, April 23, 2013).

4. Annuities Bought for Medicaid Applicant’s Spouse Are Neither Income Nor Resource

A U.S. district court held that the annuities a Medicaid applicant purchased for his wife cannot be considered as either assets or income when determining Medicaid eligibility. Jackson v. Selig (U.S. Dist. Ct., E.D. Ark., No. 3:10–CV–00276–BRW, March 13, 2013).

5. Medicaid Applicant’s Irrevocable Trust Is Available Asset Because of Loan Provision

A Minnesota appeals court ruled that a Medicaid applicant’s irrevocable trust is an available asset for Medicaid eligibility purposes because the trust gives the applicant the right to borrow money from the trust without interest.Edholm v. Minnesota Dept. of Human Services (Minn. Ct. App., No. A12-1623, June 17, 2013).

6. Parents Acting Under Power of Attorney Did Not Create Valid Special Needs Trust

A U.S. District Court held that a special needs trust is not valid because it was created by the parents of the beneficiary while the parents were acting as agents under a power of attorney. Draper v. Colvin, (U.S. Dist. Ct., D. S.D., No. 12-4091-KES, July 10, 2013).

7. 8th Circuit Rules Spouse’s Annuity Is Not an Available Resource

A federal appeals court held that an annuity purchased by a Medicaid applicant’s spouse after the applicant entered a nursing home cannot be counted as an available resource. Geston v. Anderson (8th Cir., No. 12-2224, Sept. 10, 2013).

8. Transfer from Trust to Medicaid Applicant’s Spouse Was Improper Transfer

An Ohio appeals court held that the transfer of a house from a revocable trust to a Medicaid applicant and then from the Medicaid applicant to the applicant’s spouse was an improper transfer because it increased the spouse’s community spouse resource allowance. Atkinson v. Ohio Department of Job and Family Services (Ohio Ct. App., 5th Dist., No. 13CA4, Sept. 27, 2013).

9. 10th Circuit Rules Promissory Note Is Not Available Resource for Medicaid Eligibility Purposes

Reversing a district court, a U.S. appeals court ruled that a promissory note held by an Oklahoma Medicaid applicant’s wife is not an available resource because the note cannot be transferred or sold. Gragert v. Lake (10th Cir., No. 12-6137, Oct. 8, 2013).

10. Community Spouse’s Purchase of Annuity Before Medicaid Determination Is Not Improper Transfer

The U.S. Court of Appeals for the Sixth Circuit ruled that an annuity purchased by a community spouse before a Medicaid eligibility determination is not an improper transfer and that the annuity does not need to name the state as a remainder beneficiary. Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013).

11. Son of Nursing Home Resident in Pennsylvania Liable for his Mother’s Nursing Home Bill

The Pennsylvania Supreme Court denied a petition for appeal of ruling by a appeals court that a son is liable for his mother’s nursing home bill under the state’s filial responsibility law. Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012).

For additional information concerning NJ elder law: