A New York appellate court affirms that a Medicaid applicant who failed to exercise an option to name herself as remainder beneficiary of a pre-1992 "trigger trust" made a transfer of assets for the purpose of qualifying for Medicaid. In Re Ferrugia v. New York State Dep't of Health (N.Y. App. Div., 4th, CA 03-01169, March 19, 2004).
In 1986, Martha Ferrugia established an irrevocable trust. The trust was a "trigger trust," now not permitted except for trusts created before 1992, which provided Ms. Ferrugia with income and principal as long as she was not in a nursing home. Once she entered such a facility, the trust would terminate and the remaining assets would be distributed to the beneficiaries. The trust reserved for Ms. Ferrugia the right to change remainder beneficiaries and did not exempt Ms. Ferrugia herself as among those who could be remainder beneficiaries. When Ms. Ferrugia applied for Medicaid benefits, the Chautauqua County Department of Social Services determined that because she failed to take action to obtain the trust proceeds to pay for her medical care, she had made a transfer to qualify for Medicaid.
The Department of Health upheld the determination, as did the trial court, which ruled that given Ms. Ferrugia's power to claim for herself all remaining assets of the trust at termination by naming herself as beneficiary, the trust assets were within her control and constituted available resources for Medicaid purposes. (See Ferrugia v. New York State Dept. of Health (N.Y. Sup. Ct. 192 Misc.2d 709).)
The Appellate Division of the New York Supreme Court, Fourth Department, affirms the lower court ruling. The decision is issued without comment but includes the dissenting opinion of two justices, who characterize the Department's determination that the trust assets were available to Ms. Ferrugia as "irrational." "[B]ecause petitioner is the grantor," the dissenters write, "she cannot be a remainder beneficiary, and the fact that she is limited to appointing remainder beneficiaries forecloses her from providing for the reversion of the trust property to herself."
For the full-text of this decision, go to: https://attorney.elderlawanswers.com/ferrugia-v-new-york-state-dep39t-of-health--602
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