Daughter Who Signed as Trustee Has Authority to Bind Mother to Nursing Home Agreement

A Kentucky appeals court recently held that a daughter who signed a nursing home's financial agreement in her capacity as trustee of her mother's irrevocable trust has authority to bind her mother to the agreement. King v. Butler Rest Home (Ky. Ct. App., No. 2012-CA-000789-MR, March 13, 2015).

When Geneva King entered a nursing home, her daughter, Diana Livengood, signed the financial agreement as trustee of Ms. King's trust. Ms. King initially paid privately for her care, but when she decided to apply for Medicaid, she stopped making payments to the nursing home. The state subsequently denied Ms. King's Medicaid application.

The nursing home sued Ms. King and Ms. Livengood in her representative capacity, seeking payment of the outstanding balance. Ms. Livengood responded that Ms. King hadn’t signed the contract and that Ms. Livengood did not have authority to bind her. The trial court granted summary judgment to the nursing home and ordered Ms. King and Ms. Livengood to pay $87,413.32. 

One of the important aspects of this decision is that Livengood seems to have been arguing that only the trust could be held responsible, and not her mother's larger non-trust estate. The court rejected the argument.

The Kentucky Court of Appeals affirmed, holding that Ms. Livengood has the capacity to bind her mother to the financial agreement. The court notes that the signature line on the financial agreement that Ms. Livengood signed referred to the signer as the responsible party. According to the court, by signing the agreement in this way, "[Ms.] Livengood represented that she had the capacity to bind her mother. [The nursing home] admitted [Ms.] King in reliance upon this signature."

For the full text of this decision, click here.