Pfoser: MA-LTC Recipient Not Subject to a Penalty Period for Transfers to Pooled Special Needs Trust After Age 65 -- Valuable Consideration Received
Pfoser v. Harpstead, 953 N.W.2d 507 (Minn. Jan. 20, 2021).
David Pfoser had Parkinson's disease and lived in a long-term care facility, the cost of which was paid by Medicaid for Long-Term Care (Medical Assistance or “MA-LTC”). In late 2017, Pfoser transferred $28,010 into a pooled special needs trust sub-account for his benefit. Pfoser was age 65 at the time of the transfer. The Minnesota Department of Human Services issued a final agency decision affirming the imposition of a 3.94-month transfer penalty on the sole grounds that Pfoser was over the age of 64 when he made the transfer. Pfoser appealed.
The Minnesota Supreme Court concluded that the Department erred in affirming the transfer penalty against Pfoser. The Court held that when a long-term care Medicaid recipient over age 64 makes a satisfactory showing under Minn. Stat. § 256B.0595, Subd. 4(a)(4) that he intended to dispose of assets for valuable consideration, a transfer of assets by the recipient to a pooled special needs trust is not subject to the imposition of a penalty period.
First, when an MA-LTC recipient challenges a transfer penalty and asserts the asset-transfer exception, the Department must make a factual determination whether the recipient intended to dispose of the assets either at fair market value or for other valuable consideration. Second, while analyzing whether an MA-LTC recipient has proven the asset-transfer exception, the Department must consider evidence of fair market value received at the time of the transfer and evidence of other valuable consideration received before, during, and after the time of the transfer.
The court said that Pfoser successfully demonstrated he intended to receive valuable consideration in the form of a legally enforceable interest in the trust and the future goods and services he would receive; accordingly, the transfer was not subject to a penalty period.
Read the Pfoser decision here.
Geyen: Minnesota Law Regarding Irrevocable Trust (Minn. Stat. 501C.1206) Preempted by Federal Statute
Geyen v. Commissioner, Minnesota Dept. of Human Servs., 2021 WL 2908418 (Minn. App. July 12, 2021).
When Dorothy Geyen applied for Medicaid (Medical Assistance or “MA”) benefits in 2019, her application was denied because of two irrevocable trusts that she had created 8 years prior (well outside of the Minnesota look-back period of 60 months/5 years). The Minnesota Department of Human Services argued that the trusts were not irrevocable because the assets could be used to benefit Geyen and because Minn. Stat. § 501C.1206 provides that, if an applicant for MA has created an irrevocable trust with the applicant's assets or income, the trust is treated as revocable for purposes of any MA eligibility determination.
The appellate court found that, because Minn. Stat. § 501C.1206 was more restrictive than the federal Medicaid statute, the provisions of that statute which treat irrevocable trusts as available assets are preempted by the federal exemption for irrevocable trusts. As to whether the trusts met the federal definition of irrevocable, Geyen's estate pointed out that the trusts clearly indicated Geyen's intent for the trust assets to be unavailable to her and to specific provisions in the trusts banning loans or gifts to Geyen. The Department argued that there were no provisions in the trusts specifically banning any payments to Geyen.
The appellate court, reviewing each trust, found that the provisions restricting the use of the funds were sufficient to treat the trust as irrevocable. Because Geyen died while the case was pending, the Department argued that the case was moot and that, because no one had been substituted for Geyen, there was no standing. The appellate court rejected both arguments; Geyen's family members, as beneficiaries the trusts, sustained damages when funds had to be removed from the trust to pay for Geyen's care after Medicaid was denied. The court also noted that the issues in this case were of significant public importance, given the potential implications on estate planning and on MA expenditures.
The Department did not seek review of the Court of Appeals decision.
Read the Geyen decision here.