The 19th Annual Elder and Disability Law Symposium was held on November 9, 2017 at the New Jersey Law Center in New Brunswick, NJ. As in past years, I presented the case law update at the opening plenary session. This year I summarized 40 elder and disability law cases decided from September 2016 through August 2017. Out of those cases, I focused on the “Top 10” cases during my presentation. I posted an audio recording of my presentation below for readers of this blog, along with the written version of my presentation. Each hyper-linked case name takes the reader to an article on my blog about the case, where readers may obtain a copy of each opinion.
Case Law Update
November 9, 2017
19th Annual Elder and Disability Law Symposium
The following is a summary of the “Top 10” New Jersey state and federal elder law cases of the past year:
This is the most significant—and troubling—case of the year, from an elder law practitioner’s standpoint.
G.V. (Vinci) v. Division of Medical Assistance and Health Services, OAL Docket No. HMA-17039-16 (Final Agency Decision Jan. 27, 2017); and, Vinci v. Connolly, Civ. Action No. 17-cv-7709(PGS) (D.N.J.)
Resources Transferred to a Trust Established by a Medicaid Applicant Are Countable, Preventing Medicaid Eligibility
Petitioner was the grantor and her daughter was the trustee of the irrevocable, income-only trust:
- All net income went to or for G.V. for her lifetime.
- The trustee had discretion to distribute principal to remainder beneficiaries, but not to the grantor.
- The trustee was empowered to terminate the trust at any time in her sole discretion.
- It allows the grantor the right to occupy real property owned by the trust;
- The grantor has a reserved limited power of appointment
- The trustee has the right to allocate receipts and disbursements of the trust between income and principal
- Two weeks after the trust was executed, the trustee purchased real property (a home that G.V. lived in).
- 62 months after the house was purchased by the trust, petitioner filed for Medicaid.
The ALJ held that resources in an irrevocable trust are excluded only if they are inaccessible to an individual through no fault of his/her own” and that:
trusts established by a Medicaid applicant through his or her own actions cannot, for Medicaid purposes, be ‘irrevocable’ and are available and countable assets and will prevent Medicaid eligibility as being violative of public policy for diverting scarce federal and state resources from the low income elderly, the disabled, poor women and children.
Since the petitioner would have had access to the trust assets, but for her decision to create a trust over which she had no control, the ALJ held that the trust assets were countable.
The Director upheld the ALJ’s decision denying Medicaid eligibility, and took it a step further:
[A] trust containing the assets of the Medicaid applicant is a countable[,] available resource regardless of the purpose for which the trust was established, regardless of whether the trustees have or exercise discretion under the trust, regardless of any restrictions on when or whether distributions may be made from the trust, and regardless of any restrictions on the use of distributions from the trust. Any funds that individual places in his or her own trust are still counted as that person’s resources even when they are in a trust.
The breadth of the ALJ and Director’s decisions, and the potential effect on our long-term care practice, are significant.
With the help of Rene Reixach, John Callinan has filed federal lawsuit challenging the Vinci decision. John’s motion for a preliminary injunction was recently denied, and the defendants’ motion for summary judgment is scheduled for December 11, 2017.
PROBATE OF WILLS
There were two cases regarding unsigned testamentary documents, with different outcomes.
Estate of Malsberger, 2017 WL 2991773, Docket No. 2751-15T3 (App. Div. Jul. 14, 2017) (unpublished)
Unsigned, Handwritten Note Admitted to Probate as Last Will and Testament. “I’m Alice” Suffices as Signature
- Alice Malsberger’s niece found a handwritten document in Alice’s kitchen:
I’m Alice Malsberger – I wish to be cremated…. I wish my estate be … divided and 1/3 each to [3 beneficiaries]. I want Pat White to be executrix. I intend to see a lawyer & to validate everything.
- There was no signature at the end of the document.
- Plaintiff sought to admit the document as Alice’s will.
- The judge admitted the document to probate and the Appellate Division affirmed
- Court found that Alice intended the opening line, ‘I am Alice Malsberger,’ to serve as a signature and that “a writing need not be signed by the testator in order to be admitted to probate.”
- It found that the final sentence of the document merely indicated an intent to see a lawyer to finalize the document with legal formalities.
In re Trust of London, Docket No. A-4693-14T4, A-4746-14T4 (App. Div. Sept. 6, 2017) (unpublished)
Unsigned Trust Not Valid or Enforceable, Absent Review and Assent
- In 2013, while an assisted living resident, Dr. London met with his financial advisor, and later his attorney.
- They marked up his existing trust paragraph by paragraph
- His attorney incorporated the changes into a new trust, and delivered it to the facility on May 22, 2013.
- That day, the decedent told the attorney he was going to look at it. He asked his financial advisory to come review the document with him as soon as possible.
- The next day, he fell ill, and was taken by his friend and his caretaker to the emergency room.
- On the way to the hospital, and once there, he continued to insist on signing the document and asked his friend to retrieve it from the facility
- By the time his friend returned to the hospital with it the next day, his condition had deteriorated and he could no longer sign.
- The trial court found the unsigned trust was not valid, and the Appellate Division affirmed: a testamentary document not executed in accordance with the formal requirements may be admitted to probate under J.S.A. 3B:3-3, but the proponent must prove, by clear and convincing evidence, that, “(1) the decedent actually reviewed the document in question; and (2) thereafter gave his or her final assent to it.”
- Here, there was no review or assent: “decedent’s knowledge of the contents does not establish review.”
- His urgent requests that his friend retrieve the document for him to sign does not show that he reviewed the trust or assented to it.
NURSING HOME RIGHTS: ARBITRATION AGREEMENTS
Arbitration agreements came under review, both in our NJ courts and in the US Supreme Court.
Kindred Nursing Centers v. Clark, 137 S. Ct. 1421, 2017 WL 2039160 (May 15, 2017)
US Supreme Court Warns Lower Courts: Arbitration Provisions in Nursing Home Admission Agreements Must Be Evaluated “On Equal Footing” With Other Contracts
- Kindred involves two Kentucky cases
- Family members of deceased Kindred nursing home residents filed lawsuits against Kindred for wrongful death.
- The nursing home moved to dismiss, claiming that arbitration agreements barred the claims.
- In both cases, the arbitration agreements had been signed by the residents’ agents under powers of attorney.
- The Supreme Court held that arbitration agreements must be placed on equal footing with other contracts (although it specifically stated that “a court nevertheless may invalidate an arbitration agreement based on ‘generally applicable contract defenses’ like fraud or unconscionability.”)
Nursing Home Cannot Compel Arbitration When Capacity of Resident Who Signed Admissions Agreement is Questionable
- When Mr. Patterson entered Care One at Moorestown he had serious health conditions.
- He arrived on a stretcher from the hospital, after suffering a stroke
- Care One’s own nursing evaluation found that his speech was slurred, he had a “neurological deficit,” and his cognition was “alert.”
- During the two months he was there (before he died), he was hospitalized four times.
- His estate sued Care One for wrongful death.
- Care One moved to compel arbitration based on the Admission Agreement Mr. Patterson had signed the day he entered Care One.
- The trial judge denied Care One’s motion: Care One had not met its burden of showing that there had been a “meeting of the minds” regarding the Admission Agreement.
- The judge concluded that Mr. Patterson’s competency was “at a minimum, unclear.”
- The judge found that the Admission Agreement was a contract of adhesion: pre-printed form, required for admission, no evidence that he was given the AAA arbitration rules or the chance to consult with an attorney
- The trial court’s decision was affirmed on appeal: despite a liberal policy in favor of arbitration, arbitration agreements are subject to “generally applicable contract defenses.”
There were two cases where the Appellate Division allowed undue influence claims to be resolved on summary judgment.
Estate of Tornaben, Docket No. A-5181-14T4 (App. Div. Sept. 27, 2016) (unpublished)
Summary Judgment Appropriate in Probate Lawsuit Involving Allegations of Incapacity and Undue Influence: Defendants Rebutted Presumption of Undue Influence
- Plaintiffs challenged the decedent’s will, alleging lack of capacity and undue influence by the decedent’s nephew.
- At the close of discovery, defendants moved for summary judgment.
- The trial judge granted the motion and dismissed the complaint: although there was evidence of a confidential relationship and suspicious circumstances (thus shifting the burden of proof to the will’s proponent), the defendants had successfully rebutted the presumption of undue influence.
- The appellate court affirmed.
- Although factual issues relate to undue influence and the decedent’s state of mind, summary judgment is still appropriate if there is no genuine issue of material fact.
- The certifications presented were trustworthy, and there was nothing in the record to indicate that the nephew overcame the decedent’s free will and caused her to do something she did not want to do.
Estate of Winter, 2017 WL 4273591, Docket No. A-0250-15T4 (App. Div. Sept. 27, 2017) (unpublished)
Appellate Division Finds “Confidential Relationship” and Possible “Suspicious Circumstances,” but Affirms Summary Judgment Against Plaintiffs
- Plaintiffs claimed Mr. Winter’s will was the product of undue influence.
- Winter had cancer and was hospitalized periodically during 2013.
- The defendants visited him in the hospital and helped with his medical, personal, and financial needs. Plaintiffs never visited or helped him.
- On February 3, 2013, while hospitalized (and while some of the defendants were visiting with him), Mr. Winter asked his estate attorney to come to the hospital and prepare a new will for him. Mr. Winter was in poor shape physically, but his lawyer said he had “all his mental faculties … and understood perfectly what he was doing and was quite certain about the manner in which he wished to dispose of his assets.”
- Winter told his attorney what he wanted in his new will.
- Delaney hand-wrote a will, then executed an identical formal will his lawyer provided, and then executed a revised formal will; each time, at least one of the defendants witnessed the execution.
- Winter recovered and returned home, resumed normal activities like shopping and driving, but later suffered a medical setback and he died.
- Following extensive discovery, the defendants filed a summary judgment motion, which was granted when the chancery court found no confidential relationship and no suspicious circumstances surrounding the execution of the final will.
- The Appellate Division found there was a “confidential relationship” and that “suspicious circumstances” were also present.
- Nevertheless, it affirmed summary judgment, because the preponderance of the evidence presented during discovery revealed that the will was not the product of undue influence.
We had several cases regarding legal fees in probate litigation. One theme: courts are examining the actions and motivations of the litigants, and their lawyers, in deciding legal fee awards.
Estate of Grafer, 2017 WL 344433, Docket No. A-1096-15T3 (App. Div. Jan. 24, 2017) (unpublished)
Legal Fees Denied: Both Parties Were Responsible for Protracted Litigation Over Small Estate
- Grafer’s probate estate was approximately $237,000, and she left it to her son and daughter equally.
- The siblings litigated various issues regarding the estate administration, which led to a two-day hearing.
- The judge permitted the parties to submit applications for fees; the son’s legal fee request was over $15,000; his sister’s was over $7,000.
- Both were denied, based on the limited value of the residuary estate and the fact that both parties were responsible for the “protracted litigation.”
- The court noted that “the amount of success obtained by the extensive litigation is minuscule compared with the attorney’s fees.”
- The Appellate Division affirmed.
Estate of Mellodge, 2017 WL 4248016, A-4161-15T3 (App. Div. Sept. 26, 2017) (unpublished)
“Breathtakingly Excessive” Legal Fees from Scorched Earth Approach Justified Drastic Reduction in Fee Award
- The decedent’s children engaged in probate litigation: (1) an undue influence action resulting in a 2-day trial, after which the complaint was dismissed; (2) a verified complaint for approval of the estate’s final accounting.
- Both attorneys sought fee awards of approximately $200,000. The judge determined that the fees requested were “breathtakingly excessive” because of their “scorched earth” approach.
- Those fees, if awarded, “would swallow more than half of the probate estate.”
- Therefore, one award was reduced to $25,000 and the other to $40,000, and the court ordered that one firm reimburse the estate for the approximately $200,000 the estate had already paid.
- The decision was affirmed on appeal.
Matter of Evelyn Worley, An Alleged Incapacitated Person, 2017 WL 1151071, Docket No. A-0154-15T2 (App. Div. Mar. 28, 2017) (unpublished)
Counsel Fees Denied: Litigation was a “Fight Between Brothers” and Mother Should Not Fund the “Sole Source of Stress in her Life”
- Evelyn Worley signed a POA naming her son Dwight as her agent. A few years later, she was diagnosed with mild dementia.
- After she moved to an assisted living facility, her son Richard had her sign a new POA, naming him as her agent.
- Dwight and Mrs. Worley’s 3rd son filed an OTSC to invalidate that POA, and later sought to be appointed her co-guardians.
- Following a trial, the trial judge ruled that the POA was valid.
- The parties sought counsel fees to be paid from Evelyn’s estate
- The judge awarded $2,500 to each side, and ruled that they were responsible for their remaining legal fees
- By the time the case went to trial, it was merely a “straight-out a fight between brothers…. [Evelyn] should certainly not have to fund the sole source of stress in her life.”
- On appeal, these rulings were affirmed.
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