Matter of M.L.
Annotate this CaseDecided on October 23, 2009
Supreme Court, Bronx County
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.
92475/08
Counsel for Guardian: Gina T. Danetti, Esq.
Court Examiner: Francis J. Apicella, Esq.
Alexander W. Hunter, J.
The court appointed guardian of the person and property of M.L. (hereinafter "IP"), M.S., previously moved by order to show cause for leave to expand his powers to gift a percentage of available assets in accordance with the IP's testamentary intentions to the date of the order to show cause nunc pro tunc and to make a loan of a percentage of the IP's available assets to the guardian and initiate Medicaid planning nunc pro tunc. The motion was granted by this court to the extent that the guardian was directed to set up a trust for the benefit of the IP with the banking institution serving as the co-trustee of the trust.
The guardian's counsel, Gina Danetti, Esq., seeks to reargue this court's previous decision and contends that the transfer of IP's assets to V.S., the IP's niece and beneficiary under the IP's will, to set up a trust for the benefit of the person, would likely be determined by the Department of Human Resources (Medicaid) to be an "illusory trust." Said funds would likely be considered available for the IP and it would prevent the IP from being approved for Medicaid. (Danetti Aff., para. 15).
Ms. Danetti further asserts that an alternative to gifting and loaning the IP's assets would be to place the assets in an Irrevocable Asset Protection Trust. However, the assets placed into said trust would not be deemed available because said trust will not provide for the supplemental [*2]needs of the IP. Placement into an asset protection trust will "tie up" the assets during the IP's lifetime. The only benefit of such a trust is to make sure V.S. does not spend the assets during the IP's lifetime. However, they cannot be used to enhance the IP's life during her lifetime. Under OBRA 1993, if any of the trust principal is available for the benefit of the individual, all of the assets would be deemed available and the IP would not qualify for Medicaid. (Danetti Aff., para. 18). Therefore, Ms. Danetti contends that the gift and loan of the IP's assets is the most appropriate plan.
After a conference with this court on October 15, 2009, Ms. Danetti requested that this court reconsider her initial application to authorize an outright gift to V.S. to use the gifted monies in a manner she deemed appropriate. Ms. Danetti reiterated her position that her proposed plan of gifting and loaning the monies is the most appropriate plan as V.S. is the primary beneficiary of the IP in the IP's last will and testament. V.S., her son, who is the IP's guardian, and the rest of the family have been caring for the IP and ensuring that she receives proper care. Moreover, the guardian contends that the gifting should be done in accordance with the IP's testamentary intentions.
The court appointed court examiner, Francis J. Apicella, Esq., reiterated his position that the IP's assets should be used toward the costs of her care and questioned whether or not the gift/loan plan proposed by the guardian was in the IP's best interest.
In response, the guardian's attorney indicated that the "best interest" test is not the correct test to use when analyzing a Medicaid planning application. Ms. Danetti contends that the correct test is the common law doctrine of substituted judgment pursuant to Mental Hygiene Law §81.21. She cites to the Law Revision Commission Comments to Mental Hygiene Law §81.21 which states that, "...the court should consider whether a competent reasonable person in the position of the incapacitated person would be likely to perform the act or acts under the same circumstances." Ms. Danetti also cites to case law which indicates that a guardian may be granted specific authority to undertake Medicaid planning. In addition, the guardian's attorney also submitted a copy of a Fair Hearing Decision No.4733465H, dated August 29, 2007, which supported the use of a DRA compliant promissory note in Medicaid asset protection planning.
Under the plan proposed by the guardian's attorney, the IP's social security income will be used to pay her monthly nursing home bill and set aside a burial fund for her. The guardian will then gift a portion of the IP's assets to V.S. which will admittedly result in a penalty period in which the IP will be ineligible for Medicaid nursing home benefits. However, the percentage of the IP's assets that will be loaned to the guardian will be used to pay through the penalty period. If this court approves the plan outlined by the guardian's attorney, then the month after making the gift to V.S. and establishing the promissory note and loan, the IP will be "otherwise eligible" for Medicaid nursing home benefits.
The guardian submitted an affidavit with the initial motion and stated on the record in open court that he understood that he would be bound by a promissory note to use the remaining [*3]portion to pay through a penalty period created by the gift. In addition, the guardian stated 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. (M.S. Affidavit, para. 15).
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 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.
Upon reconsideration, this court hereby grants the guardian's initial application to conduct medicaid planning in the form of a gift and loan. The guardian is permitted to gift a portion of the IP's assets to the IP's niece and make an actuarially sound loan to himself in the form of a promissory note that satisfies DRA's requirements. The note shall provide that the repayment terms be equal, that there be a prohibition against any deferral of payments for the borrower on the note and that the note not be cancelled upon the lender's death. Social Services Law §366; 42 U.S.C.A. §1396p.
In addition, both Ms. Danetti and Mr. Apicella are hereby permitted to submit an affirmation of services related to the instant application.
This constitutes the decision and order of this court.
Dated:October 23, 2009Hon. ___________________________
J.S.C.
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