Remainder Interest in Real Property Vests at Testator’s Death, Subjecting It to Medicaid Lien

By Patricia Kalla Zonnenberg

A Massachusetts appeals court rules that a remainder interest in real property vested upon the testator’s death, giving the estate of a deceased grandchild with special needs a share of the sale proceeds that could be used to reimburse Medicaid for her care. Dell’Olio v Assistant Secretary of the Office of Medicaid (Mass. App. Ct., No. 18-P-1489, Dec. 10, 2019).

Andrew Dell’Olio died in 1956, devising two adjacent, triple-decker residences as life estates to his two children and their spouses, with the remainder to his grandchildren after the children’s deaths. Emily Dell’Olio was the eldest of Mr. Dell’Olio’s seven grandchildren. She had a mental disability and was institutionalized, with MassHealth (Medicaid) incurring more than $1.2 million in expenses on her behalf by the time she died in January 2008.

Mr. Dell’Olio’s son and daughter predeceased Emily; his son-in-law died after Emily in 2008 and his daughter-in-law, Emily’s mother, died in 2013. Soon thereafter, three of the six remaining grandchildren petitioned the probate court to partition the two properties in order to accommodate the three who wanted to reside in the properties and the three who did not. The title examiner noticed that Emily’s estate might have an interest in the property against which MassHealth might collect and notified all interested parties. The petitioners in the partition action filed a declaratory judgement suit to resolve that question.

On cross motions for summary judgment, the surviving grandchildren argued that Emily’s interest in the properties did not vest until all the life tenants died and, because Emily died before they did, her estate had no vested interest in the properties. The court agreed, holding that her interest lapsed upon her death, then allowed the property to be sold. MassHealth appealed and a one-seventh share of the sale proceeds was escrowed. On appeal, MassHealth argued that Emily’s interest in the properties created by Mr. Dell’Olio’s will vested when he died. The grandchildren argued that her interest was contingent upon surviving the life tenants. 

The Appeals Court of Massachusetts reverses and remands. The court finds that there is a strong presumption that a testator intends remainder interests to vest upon his death unless the provisions of the will express a clear intention that vesting is postponed until the death of the life tenant. The court distinguishes between vesting “in interest” and “in possession,” noting that where there is no contingency based on future events, the beneficiary’s remainder interest vests “in interest” upon the death of the testator and vests “in possession” when the beneficiary gains the right to occupy and enjoy the property. The court concludes that Mr. Dell’Olio’s will did not make his grandchildren’s remainder interest contingent on any future event. Consequently, Emily’s interest vested upon her grandfather’s death.

To read the court’s full opinion, click here.

 

 

 

 

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