The Pennsylvania Superior Court ruled that an orphans’ court had properly denied a guardian’s petition to enter into a plan to spend down an incapacitated person’s estate to maintain the incapacitated person’s eligibility for medical assistance, finding that focusing on benefiting himself and other heirs, rather than the incapacitated person’s, breached his fiduciary duty. In re S.C., No. 2335 EDA 2025 (Pa. Super. Ct. July 1, 2026).
In 2022, the orphans’ court found S.C. to be incapacitated because of dementia. The court appointed S.C.’s nephew, Michael Coveney, as the guardian of her estate and person. The order required Michael to take all necessary actions to obtain or maintain medical insurance for S.C., including, if applicable, through the medical assistance program.
In 2025, Michael filed a petition seeking court authorization of a medical assistance spenddown plan to maintain S.C.’s eligibility for medical assistance. He alleged that he had sold S.C.’s home for $524,611.89; her other assets were valued at $1,074,839; and her monthly income was $6,515.22. Michael asserted that, if the court did not authorize him to execute a spenddown plan, S.C. would lose her medical assistance benefits because her resources exceeded the medical assistance limit. The court denied Michael’s petition in part, stating that he had a fiduciary duty to expend S.C.’s income for her care and maintenance. Michael filed a timely notice of appeal.
The Superior Court of Pennsylvania noted that section 5536 of the Pennsylvania Consolidated Statutes requires the orphans’ court to approve expenditures of principal from the guardianship estate for the care, maintenance, or education of an incapacitated person. In addition, it authorizes the court to substitute its judgment for that of the incapacitated person in making estate planning decisions, including gifting of assets not required for their maintenance, support, and well-being for the purpose of minimizing taxes or carrying out a lifetime giving pattern, considering the intentions of the incapacitated person to the extent they can be ascertained.
The court found no evidence in the record that the proposed spenddown would benefit S.C. or carry out her intentions. Rather, the court found that Michael was instead focused on benefiting S.C.’s heirs, including himself, in contravention of his fiduciary duty as a guardian to act with the utmost good faith to advance S.C.’s interests. The court rejected Michael’s argument that S.C. should have the same opportunity to engage in medical assistance planning as a competent person because an incapacitated person, by definition, is unable to engage in such planning, and the court is authorized to substitute its judgment for theirs as permitted by statute and based on evidence provided by their guardian.
The court ruled that Michael had neither cited any precedential Pennsylvania case law nor presented any evidence that S.C. would have divested herself of most of her assets and income to benefit him and other heirs. It determined that S.C. could use her assets for her own benefit to obtain better medical insurance and for activities or services that would exceed the Medicaid personal needs allowance. As a result, the court affirmed the orphans’ court’s order.
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