Massachusetts’ highest court holds that a Medicaid applicant retaining a life estate in a house placed in a “nominee trust” does not make the house a countable asset for Medicaid eligibility purposes. Guilfoil v. Secretary of the Executive Office of Health and Human Services (Mass., No. SJC-12922, Feb. 9, 2021).
Dorothy Frank transferred her house to a trust that named her children and herself as beneficiaries. She retained a life estate interest in the house, with her children as remainder beneficiaries. According to the trust agreement, the trust can be amended in a writing signed by all the beneficiaries and can be terminated at any time. If the trust is terminated, it will be transferred to the beneficiaries.
Ms. Frank moved into a nursing home and applied for MassHealth (Medicaid). The state denied her benefits after determining the house was a countable asset. Ms. Frank appealed, but the state and the trial court agreed that the house was countable. Ms. Frank appealed again, arguing that because the beneficiaries have the right to terminate the trust, the trust is a “nominee trust,” meaning that so MassHealth regulations covering revocable and irrevocable trusts do not apply.
The Massachusetts Supreme Judicial Court reverses, holding that the house is not a countable asset. The court rules that the trust is a “nominee trust,” not a traditional trust, and because Ms. Frank had no ability to revoke the trust or receive a distribution, the “initial transfer of the remainder interest in the property to her children is the equivalent of an irrevocable gift.” The court further holds that “a life estate does not permit an individual to sell the home and distribute the proceeds,” so Ms. Frank’s life estate is not a countable asset for the purposes of Medicaid eligibility.
For the full text of this decision, go to: https://www.mass.gov/files/documents/2021/02/09/a12922.pdf
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