IN MATTER OF M.L., 924XX/08 (6-2-2009)

2009 NY Slip Op 29239

IN THE MATTER OF THE PROCEEDING, UNDER ARTICLE 81, MENTAL HYGIENE LAW,

FOR THE APPOINTMENT OF A GUARDIAN OF THE PERSON AND PROPERTY OF M.L., an

Incapacitated Person, for leave to expand Guardianship powers to permit

Guardians to execute a Medicaid Asset Protection Plan.

924XX/08.

Supreme Court of the State of New York.

Bronx County.

Decided June 2, 2009.

  Gina Danetti, Esq., Attorney for Guardian/Petitioner.

  Francis Apicella, Esq., Court Examiner.

  ALEXANDER W. HUNTER, J.

  The court appointed guardian of the person and property of M.L.
(hereinafter "IP"), Matthew S., moves for leave to expand his powers to
gift, nunc pro tunc, to the date of the order to show cause, a percentage
of available assets in accordance with the IP's testamentary intentions,
make a loan, nunc pro tunc, to the date of the order to show cause, of a
percentage of the IP's available assets to the guardian and initiate
medicaid planning. The motion is granted in part.

  A hearing was held before this court on May 21, 2009 at which the
guardian testified and was subject to cross-examination by the
court-appointed court examiner, Francis Apicella, Esq.

  Matthew S., the grandnephew of the IP, was appointed to serve as the
guardian of the IP's person and property by order and judgment dated
December 18, 2008. The IP is eighty-seven (87) years old and currently
resides at Hebrew Home for the Aged Nursing Facility (hereinafter "Hebrew
Home"). The IP requires long-term care in a nursing home facility,
indefinitely. According to the guardian, the IP is presently medically
eligible for nursing home Medicaid benefits. He seeks this court's
authorization to transfer the IP's assets to make her financially
eligible for Medicaid benefits before she is forced to deplete her
assets. (Matthew S. Affidavit, para. 3).

  According to the petition, the IP's assets, inclusive of bank
accounts, certificates of deposit, brokerage accounts and bonds, total
$366,649.00. The IP's fixed monthly income consists of $250 per month in
social security retirement benefits. She currently pays $672 per day for
a private room or a total of approximately $20,160.00 per month to Hebrew
Home for her
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care. The guardian's intent is to reduce the IP's assets to less than
$13,800 so that the IP will be eligible for Medicaid to pay for her
nursing home care.

  Matthew S. testified that his family's intentions have always been to
pass assets along to the next generation. He stated that the IP executed
a last will and testament naming his mother, the IP's niece, Vivian S.
as her beneficiary. A copy of the IP's last will and testament is
annexed to the petition as Exhibit 3. Matthew S. seeks to gift a portion
of the IP's assets in accordance with the distribution terms of her last
will and testament. Specifically, in accordance with Medicaid planning,
the guardian, through his attorney, seeks to apply the IP's social
security income to pay her monthly nursing home bill and to set aside a
burial fund for her. The guardian will then gift a portion of the IP's
assets to Vivian S. which, according to the guardian's attorney will
result in a penalty period in which the IP will be ineligible for
Medicaid nursing home benefits.

  Another percentage of the IP's assets will be loaned to the guardian
and the guardian stated in his affidavit that he understands that he will
be bound by a promissory note to use the remaining portion to pay through
a penalty period created by the gift. This will allow the IP to access
the Medicaid program to pay for her medical needs before she is forced to
spend down all of her assets. (Matthew S. Affidavit, para. 14). In
addition, the guardian asserts that under the terms of the loan, he will
be responsible for paying the nursing home a monthly private pay rate
with a combination of loan monies and income. (Matthew S. Affidavit,
para. 15).

  According to the guardian's attorney, this combination will fall just
under the private pay rate of the nursing home. Medicaid will then
determine that the IP is "otherwise eligible" on the pick up date if her
total payments, loan and income, do not exceed the private pay rate of
the nursing home. If her total payments, loan and income, do exceed the
private pay rate, she will not be considered "otherwise eligible" for
Medicaid and the penalty period will not begin to run. Therefore, a
small monthly shortfall will accumulate through the penalty period and
the shortfall will be settled at the end of the penalty period with the
IP's allowable resources of $13,800. (Danetti Affirmation, para. 9).

  If this court approves the plan outlined by the guardian's attorney,
then the month after making the gift to Vivian S. and establishing the
promissory note and loan, the IP will be "otherwise eligible" for
Medicaid nursing home benefits. The guardian stated to this court that
the proposed transfer to his mother, Vivian S., will enable his mother
to have the necessary assets to pay for the IP's personal needs such as
a television set, adult diapers and other personal items the IP may
require. Currently, the guardian's mother is paying for the IP's
personal needs out of her own pocket. The guardian further stated that
once the transfer is made to Vivian S., he will make sure that the funds
are used for the IP's personal needs. If the transfer is not permitted,
then the guardian and his attorney estimate that the IP's funds will be
depleted within two (2) years, thereby leaving no source of funds to
purchase necessities and personal items for the IP. In addition, the
guardian stated that it would be the IP's desire to have her assets
devised to her niece in accordance with the intentions of her last will
and testament.
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  The court examiner expressed concern over the fact that once the
transfer of assets is made to the IP's niece, Vivian S., there will be
no way to guarantee that the money will be used for the IP's personal
needs. He elicited testimony from the guardian with respect to whether
or not the IP has ever made a transfer of her assets in the past and the
guardian stated that she once made a gift of $10,000 to each of his
children and his brother's children. The court examiner was of the
opinion that it would be more prudent to place the IP's funds in a
trust, though he acknowledged that because the IP is over the age of
sixty-five (65), the guardian cannot establish a supplemental needs
trust for her benefit.

  The guardian's attorney cited to several cases in her affirmation
wherein courts have granted the authority to undertake Medicaid
planning. Indeed, this court has permitted guardians to conduct Medicaid
planning numerous times in the past and this court finds that Medicaid
planning is proper under certain circumstances. However, this court is
concerned with the plan outlined by the guardian and his attorney herein
because there is no way to ensure that the IP will be left with any
assets for her personal use.

  Mental Hygiene Law § 81.21(a)(1) expressly states that a guardian of
the property has the power to make gifts. Mental Hygiene Law § 81.21(b)
states,

  "If the petitioner or the guardian seeks the authority
  to exercise a power which involves the transfer of a
  part of the incapacitated person's assets to or for
  the benefit of another person . . . the petition shall
  include the following information . . . 1. whether any
  prior proceeding has at any time been commenced by any
  person seeking such power with respect to the property
  of the incapacitated person . . . 2. the amount and
  nature of the financial obligations of the
  incapacitated person including funds presently and
  prospectively required to provide for the
  incapacitated person's own maintenance, support, and
  well-being and to provide for other persons dependent
  upon the incapacitated person for support . . . 3. the
  property of the incapacitated person that is the
  subject of the present application . . . 4. the
  proposed disposition of such property and the reasons
  why such disposition should be made . . . 5. whether
  the incapacitated person has sufficient capacity to
  make the proposed disposition . . . 6. whether the
  incapacitated person has previously executed a will or
  similar instrument and if so, the terms of the most
  recently executed will . . . 7. a description of any
  significant gifts or patterns of gifts made by the
  incapacitated person . . . 8. the names, post-office
  addresses and relationships of the presumptive
  distributees of the incapacitated person. . ."

In the case at bar, the guardian provided this court with a list of the
IP's assets and his reasons for wanting to effectuate the transfer of
the IP's assets, to wit, medicaid planning and preserving the IP's
assets to use for her personal needs. The IP executed a will naming her
niece, Vivian S. as her beneficiary and the guardian seeks to effectuate
the transfer to Vivian S.

  Mental Hygiene Law § 81.21(d) states that in determining whether or
not to approve the application, the court shall consider,
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  "1. whether the incapacitated person has sufficient
  capacity to make the proposed disposition himself or
  herself . . . 2. whether the disability is likely to
  be of sufficiently short duration such that he or she
  should make the determination with respect to the
  proposed disposition when no longer disabled . . . 3.
  whether the needs of the incapacitated person and his
  or her dependents or other persons depending upon the
  incapacitated person for support can be met from the
  remainder of the assets of the incapacitated person
  after the transfer is made . . . 4. whether the donees
  or beneficiaries of the proposed disposition are the
  natural objects of the bounty of the incapacitated
  person and whether the proposed disposition is
  consistent with any known testamentary plan or pattern
  of gifts he or she has made . . . 5. whether the
  proposed disposition will produce estate, gift, income
  or other tax savings which will significantly benefit
  the incapacitated person or his or her dependents . .
  . 6. such other factors as the court deems relevant."

This court is most concerned with subsection 3.

  The guardian asserts that the transfer will benefit the IP in that the
money that is transferred to his mother, Vivian S., will be used for the
IP's personal needs. However, since Vivian S. has no legal obligation to
use the funds that are transferred for the IP's benefit, this court
finds that the needs of the IP may not be made once the transfer is
made. An assurance from the guardian that the funds will be used for the
IP's needs does not satisfy this court's concerns that once the transfer
of her assets is made, the IP will have sufficient monies left and
available to her for her own personal needs. The guardian would be
legally obligated to use the IP's funds for her needs but his mother,
Vivian S., has no legal obligation to do so. This court does not doubt
that if the IP was competent, she would prefer that her assets be left
to the beneficiary of her will. However, it is not clear that she would
make such a transfer if it would possibly leave her no funds for her own
personal needs.

  As a result of this court's concerns, the guardian's attorney proposed
setting up a trust for the benefit of the IP once the transfer of assets
is made to Vivian S. This court finds that the establishment of a trust
for the benefit of the IP would be a proper way to conduct Medicaid
planning and would preserve the IP's assets for her future personal
needs. Therefore, the guardian's application for permission to gift the
IP's assets to Vivian S. in order to conduct Medicaid planning is
granted to the extent that the guardian shall set up a trust for the
benefit of the IP with the banking institution serving as the co-trustee
of the trust.

  The guardian shall provide this court with a copy of the proposed
trust instrument for this court's approval prior to making the transfer
of the IP's assets to Vivian S.

  Settle order on notice.