Medicaid Case Highlights Risk of Transferring Assets

by Matthew Karr, Esq. on June 17, 2013

A recent court ruling in New York found the grandchildren of a nursing home resident liable for over $250,000 after a ‘fraudulent conveyance’ rendered her insolvent and ineligible for Medicaid.

In 2000, Lillian Heather purchased annuities for each of her grandchildren as part of her estate plan. The annuities named the grandchildren as annuitants and beneficiaries, but Ms. Heather retained control of the accounts. Ms. Heather also appointed her grandchildren as her attorneys-in-fact under a power of attorney. In 2006, after entering a nursing home, Ms. Heather liquidated the annuities and the full value was transferred to the grandchildren. She applied for Medicaid benefits, but the state denied benefits because she had transferred assets for less than fair market value.

In Chapin Home for the Aging v. Heather, the nursing home sued the grandchildren for fraudulent conveyance, arguing that they had transferred Ms. Heather’s assets for no consideration, rendering her insolvent and unable to pay for her own care. The New York Supreme Court granted judgment for the nursing home in the amount of $287,893.95, agreeing that the transfers were made without consideration.  Moreover, the grandchildren did not present any evidence that the transfers did not make Ms. Heather insolvent.

Without proper planning Medicaid’s asset transfer penalties can have a devastating effect as this case highlights.  Preplanning well in advance of needing care is always the best approach, however, when immediate care is needed there are still options for protecting assets without running afoul of Medicaid’s transfer rules.  Contact the Heritage Law Center to discuss your options for Medicaid planning today.

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