A Massachusetts appeals court is hearing a case involving annuities purchased by Medicaid recipients’ spouses. The court will decide whether, upon a community spouse’s death, the remainder of an annuity naming the state as beneficiary must go to the state or whether the spouse’s beneficiaries are entitled to the proceeds.
Edward Mondor and James Castle each purchased annuities as part of Medicaid planning when their spouses were admitted to nursing homes and applied for MassHealth (Medicaid). As required by state Medicaid law, the spouses named the state as beneficiary of the annuity contract. Both spouses were required to sign documents that acknowledged the state was the beneficiary of the contract for “up to the total amount of medical assistance paid on behalf of the individual.” Both Mr. Mondor and Mr. Castle passed away with money remaining to be paid from the annuity. Mr. Mondor’s annuity had $97,720.28 remaining and Mr. Castle’s annuity had $110,000 left.
The state filed claims to the remaining annuity proceeds and the beneficiaries of both Mr. Mondor’s and Mr. Castle’s estates filed competing claims. The beneficiaries are arguing that spousal annuities are exempt from the requirement that they name the state as the remainder beneficiary. According to the beneficiaries, the purchase of an annuity by a spouse is a transfer for the “sole benefit” of the spouse, and that such transfers do not require the state to be named as a remainder beneficiary. The state claims that the beneficiaries’ argument would create a loophole in Medicaid law that would allow anyone to shelter their assets.
The beneficiaries are being represented by Massachusetts elder law and estates attorney Brian E. Barreira.
Our thanks to Wisconsin ElderLawAnswers member Dale M. Krause for alerting us to this pending case.