The blog reports information of interest to seniors, their families, and caregivers. Recurrent themes are asset and decision-making protection, and aging-in-place planning.
Friday, May 9, 2025
Dangers of Incomplete and Last-Minute Estate Planning: A Mississippi Case Study
Wednesday, September 29, 2021
Scrivener’s Error and Limited Power of Appointment Do Not Make Property Available to State to Recoup Medicaid Benefits
A recent Massachusetts land court ruling is instructive regarding the extent to which states will go in attempting to collect resources for Medicaid.
Athena and Sotirios Koutoukis hired an attorney to transfer ownership of their real estate to their daughters, creating and retaining a life estate for their benefit. They also retained a power of appointment to convey the property to their children. Mr. Koutoukis received MassHealth (Medicaid) benefits before he died. After Mr. Koutoukis’s death, the attorney for the estate discovered that the deed included the words “tenants in common for life and further,” which was an error.
On a motion for summary judgment, the nonmoving party cannot create a dispute of material fact simply by declaring that it disputes the material fact. The nonmoving party is supposed to provide some evidence that disputes the fact; that is, some evidence that, if credited, would support the opposite of the claimed undisputed fact. On these cross-motions for summary judgment, the defendant Secretary of the Executive Office of Health and Human Services (EOHHS) has attempted to forestall summary judgment on the plaintiffs’ claim for reformation of a deed due to a scrivener’s error by the simple expedient of saying the affidavits provided by the plaintiffs do not support the claim, without providing any evidence of its own to the contrary.
As the affidavits do support the claim for reformation, there is no dispute of material fact. Based on the undisputed material facts and the applicable law, summary judgment shall enter reforming the subject deed to clarify that the parties’ intent was to create a life estate, and declaring that the life estate and the limited power of appointment in the deed do not make the subject property a
The court noted that state "has denied many of the asserted facts relating to the claim of scrivener’s error in the subject deed without providing any affidavits or other evidence whatsoever."Estate of Koutoukis, at p. 4.
The court concluded that the state cannot recoup Medicaid benefits from a Medicaid recipient’s property, left in a life estate notwithstanding a scrivener’s error, and a limited power of appointment. Estate of Koutoukis v. Secretary of the Executive Office of Health and Human Services (Mass. Land Ct., Dept. of the Trial Ct., No. 20 MISC 000004 (RBF), Sept. 17, 2021).
Thursday, October 1, 2020
Trustee Authority to Sell Trust Property to Pay for Settlor’s Long-Term Care Costs
Reversing a lower court, Wyoming’s highest court has ruled that a trustee has authority to sell property in the trust to pay for the settlor’s long-term care even though the trust provided that the property was to be placed in trust for the settlor’s daughter when the settlor died. Jackson v. Montoya (Wyo., No. 2020 WY 116, Sept. 4, 2020).David Jackson’s parents created a trust and transferred their property to the trust. The trust provided that the trustee had authority to pay the surviving settlor from the trust property, including selling trust property, as necessary to provide for his or her comfort. The trust also provided that on the death of both parents, the property in the trust should be conveyed to a trust for the benefit of Mr. Jackson’s sister, Candyce Montoya, who was authorized to live on the property rent free. Mr. Jackson became the successor trustee of the trust and wanted to sell the property to pay for his father’s long-term care, so he served an eviction notice on Ms. Montoya. Ms. Montoya refused to vacate the property.Mr. Jackson sued, seeking a declaratory judgment that the trust was entitled to the property. The trial court interpreted the trust to grant Ms. Montoya a life estate in the property, which prevented Mr. Jackson from selling the property. Mr. Jackson appealed.This is an all-too common cause for dispute; does a surviving spouse have the authority to sell property held in a marital trust (or sometimes even a separate trust) that benefits the surviving spouse, where the property is ultimately retained in trust for the benefit of a child? Typically, the trust is clear and ambiguous, by, for example, reciting an order of intent and authority (for example, "it is my/our intention to provide for each other, and then for the surviving spouse, and then upon the death of both of us to provide for our surviving children, and then for our grandchildren if there is a death of one our children..."). Sometimes, though, a trust is not so clearly crafted, and in this case, ambiguity arose, at least in part, from a specific amendment which the daughter claimed provided a specific and different intention as to specific property for her benefit.The Wyoming Supreme Court reversed, holding that Mr. Jackson had authority to sell the property to pay for his father’s long-term care. According to the court, the trust makes clear that the trustee has the right to “sell or deal with any Trust property, in his or her sole discretion, without interference, for the benefit of the surviving settlor’s care, comfort, support, welfare or maintenance, as may be necessary.” The court ruled that when the trust provisions are read as a whole, “it is clear” that Ms. Montoya’s interest “will not vest until the death of the remaining Settlor.”Source of original article: "Trustee Has Authority to Sell Property in Trust to Pay for Settlor’s Long-Term Care Costs," Elderlaw Answers (9/21/2120).
Wednesday, June 8, 2016
In Ohio a Medicaid Lien Can Be Placed Against a Life Estate to Real Property Even After the Death of the Medicaid Recipient
The new law also expands the State’s rights to place liens on property. As part of the State Budget bill passed on June 30, 2005, the State of Ohio now has authority to place a lien on the assets of the Medicaid recipient or the recipient's spouse...The liens, which are being placed on these properties, are akin to the "Liens for the Aged" process which was in place in many states in the 1950s and 1960. These laws were ultimately rejected by courts on various constitutional grounds. There is no guarantee that a challenge to the current law will meet with similar success. More importantly, for every family that challenges these liens, other families will simply repay the state, or the spouse will sell the family home which may result in insufficient funds to continue living independently.
The new law also turns upside-down traditional property rights. Traditionally, right and title to property held jointly with a right of survivorship or pursuant to a transfer on death designation [or conveyed subject to a life estate] vested in the survivor (or beneficiary as the case may be) at the time of death. This “vesting” is apparently thought to create a hardship for the state, since it could undermine its lien rights. As a result, in order to prevent the vesting at death, the statute actually redefines death as follows:So, for the purposes of the State of Ohio, a person does not "die" upon physical demise, and property interests that traditionally "vested" in and to another person upon death never really vest so long as the State also has an interest in the property.
- “Time of death” shall not be construed to mean a time after which a legal title or interest in real or personal property or other asset may pass by survivorship or other operation of law due to the death of the decedent or terminate by reason of the decedent's death.” See O.R.C.§5111.11 (A)(5).
I have for more than a decade encouraged clients to adopt modern and more effective property transfers utilizing irrevocable trusts. "I told you so," rings hollow and ominous given the consequences for Ohioans that want to pass to their heirs the assets they have worked so hard to protect.
Monday, March 30, 2015
Life Estate Renders Medicaid Applicant Ineligible
Monday, September 8, 2014
Six Questions to Ask Before Making Gifts
Do you understand the tax consequences of the gift? Sometimes there are adverse tax consequences in making a gift. The most commonly misunderstood of these is the loss of the step-in basis of appreciated property to the fair market value on the date of death. This -step-up in basis means, in essence, that your heirs can sell your assets in which you have capital gains without incurring a capital gains tax. Donors can sometimes overlook this benefit. At a minimum, a short conversation with an elder law attorney or tax professional will make clear the consequences and the options available to best accomplish your objectives.