The Pennsylvania Superior Court affirmed a lower court’s ruling that denied a guardian’s proposed medical assistance spenddown plan, finding that it would be a breach of her fiduciary duties to her ward because it would include a gift to herself and would neither minimize taxes nor carry out a lifetime gifting pattern as required by Pennsylvania statute. In re J.C.B., No. 2397 EDA 2025 (Pa. Super. Ct. May 26, 2026). 
Julie Behrndt’s father, J.C.B., was declared by a court to be incapacitated as a result of dementia. Julie was appointed guardian of both his person and estate. The court’s order provided: “[t]he Guardian(s) of the Estate shall take all actions necessary to obtain and/or maintain medical insurance for [J.C.B.], including under the Medical Assistance Program, if applicable.” In re J.C.B., No. 2397 EDA 2025, at 1 (Pa. Super. Ct. May 26, 2026). Julie later filed a petition to authorize a medical assistance spenddown, asserting that J.C.B.’s resources exceeded the medical assistance allowance and that, if she was not authorized to create a spenddown plan, he would be required to pay out of pocket for his nursing home expenses. She argued that it would be unjust to treat J.C.B. differently from a person with capacity who could create a spenddown plan to qualify for medical assistance. She sought to increase his burial reserve and provide a gift to herself, which would leave J.C.B. with the maximum resource allowance of $2,400.
The Orphans’ Court denied Julie’s petition for the spenddown, appointed a guardian ad litem to investigate her use of J.C.B.’s assets and ensure that they were used solely for his care and maintenance, and ordered her to pay attorney’s fees associated with her petition. Julie filed a timely appeal, asserting that the Orphan’s Court had abused its discretion and erred in failing to apply federal and state law authorizing the spenddown of J.C.B.’s assets.
The Pennsylvania Superior Court noted that, under section 5536 of the Pennsylvania Consolidated Statutes, court approval is necessary for all expenditures of principal from a guardianship estate. It also provides that the court is authorized to substitute its judgment for that of the incapacitated person with respect to estate planning, including gifting. However, in considering gifting, the court must be satisfied that assets exist that are not required for the incapacitated person’s maintenance, support, and well-being. Further, section 5536 limits gifting to plans resulting in tax minimization or that carry out a ward’s lifetime gifting pattern.
The court found that Julie had neither averred in her petition nor presented evidence at the hearing that the spenddown plan she proposed would minimize taxes or carry out a lifetime gifting pattern as required by section 5536, benefit J.C.B., or carry out any of his previously expressed wishes. The court found that Julie’s spenddown proposal instead primarily benefited herself, which was a breach of her fiduciary duty to act with the utmost good faith in furthering J.C.B.’s interests as guardian of his estate.
Further, the court found that Julie’s assertion that an incapacitated person should be able to engage in the same Medicaid planning as a competent person was “wholly unavailing.” Id. at 13. Rather, the court held that her assertion was belied by Pennsylvania’s definition of an incapacitated person as someone who is unable to manage their financial resources. The court determined that, by definition, J.C.B., as an incapacitated person, lacked the ability to determine whether to engage in medical assistance planning. Therefore, the Orphan’s Court was authorized to substitute its judgment for J.C.B.’s, as set forth by statute and based on evidence provided by Julie. The court found that Julie had not cited Pennsylvania case law supporting her argument or provided evidence that J.C.B. would have gifted his assets to benefit her. The court held that, although J.C.B. permanently resided in a nursing home, he could benefit from his assets by enjoying quality-of-life enhancements such as outings, special foods, or streaming services that Julie could provide from his funds but that would exceed the Medicaid personal needs allowance.
The court thus affirmed the Orphan’s Court’s order.
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