Planning for Life

MassHealth Denial in Trust Case Overturned

Posted by Harry S. Margolis on March 20, 2018

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By Harry S. Margolis

In a case argued by Margolis & Bloom senior associate Sarah Hartline, the Essex Superior Court has overturned a MassHealth denial of coverage for a nursing home resident who MassHealth found had countable assets available from a trust she had created.attorney-sarah-foster-headshot-1.jpg

The trust in question in Yanow v. Office of Medicaid (Essex Sup. Ct. CA No. 1677CV00599, March 7, 2018), provided for the payment of income earned on trust assets to the grantor, but barred the distribution of any principal to her. Nevertheless, MassHealth argued that due to an administrative provision in the trust which permits the trustee "to determine what part of the trust property is income and what part is principal" the trustee was able to deem all of the trust property "income" and distribute it to the grantor (the applicant for MassHealth benefits).

The fair hearing officer agreed with MassHealth, finding that "the Trust provisions considered collectively allow circumstances in which [Yanow] can access Trust principal."

Relying heavily on the Appeals Court case of Heyn v. Director of the Office of Medicaid (89 Mass. App. Ct. 312, 2016), the court in Yanow finds that the standard trust provision relied on by MassHealth does not permit the reclassification of trust property between income and principal without regard to the standard meanings of these terms. The judge quotes the Heyn decision, which says that "the trustee's authority in that respect is expressly constrained by 'reasonable accounting principles' and practice and state law."

The court finds that the funds in the trust in question are not available to the MassHealth applicant and that she should receive coverage. It does, however, refuse to require MassHealth to pay attorneys fees.

Topics: MassHealth, trusts

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