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Keywords

statuteappealtrust
plaintiffattorneystatutetrust

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Cohen v. Commissioner of Div. of Medical Assistance, 423 Mass. 399, 668 N.E.2d 769, 51 Soc.Sec.Rep.Serv. 492, Med & Med GD (CCH) P 44,551

Facts

The cases involved individuals who had established irrevocable trusts, with the intention of qualifying for Medicaid while retaining access to their assets. The Division of Medical Assistance denied their Medicaid applications, asserting that the trust assets were available to the beneficiaries. The Superior Court judges affirmed these denials, leading to the appeal. The trusts included clauses that prohibited distributions that would render the beneficiaries ineligible for Medicaid, which became the focal point of the legal dispute.

In response, attorneys and financial advisers hit upon the device of having a person place his or her assets in trust so that those assets would provide for that person's comfort and well being, maybe even leaving something over to pass on his or her death, while creating eligibility for public assistance.

Issue

The main legal issue was whether the assets in the irrevocable trusts were available to the beneficiaries for the purpose of determining their eligibility for Medicaid benefits.

The issue presented in these cases arises from the wish of persons with some means, perhaps even considerable means, to preserve their assets in the face of the large medical expenses faced particularly by elderly persons.

Rule

The court applied the Medicaid Qualifying Trust (MQT) statute, which states that the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor is deemed available for Medicaid eligibility purposes.

In the case of a medicaid qualifying trust [described in paragraph (2)], the amounts from the trust deemed available to a grantor, for purposes of subsection (a)(17), is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor.

Analysis

The court analyzed the language of the trusts and the MQT statute, concluding that the discretion granted to trustees to distribute funds, even with limitations, meant that the full amount of the trust assets was available to the beneficiaries. The court rejected the argument that the trusts' provisions to avoid disqualifying payments could shield the assets from being counted in the Medicaid eligibility determination.

The clause 'under the terms of the trust,' on which plaintiffs place such heavy emphasis, nestles between the phrase 'the maximum amount of payments that may be permitted' and 'to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor.'

Conclusion

The Supreme Judicial Court affirmed the lower court's rulings, holding that the trust assets were available to the beneficiaries, thereby rendering them ineligible for Medicaid assistance.

Affirmed.

Who won?

The Commonwealth prevailed in the case, as the court upheld the Division of Medical Assistance's determinations that the trust assets were available to the beneficiaries, thus disqualifying them from Medicaid benefits.

The Commonwealth argues that trusts of the sort in issue here do not get trust assets or income out from under the terms of the MQT statute since the purpose of the statute is to identify when, because of trustee discretion, trust assets are available to the beneficiary.

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