Elder Law

Long-term nursing home care can quickly consume a person’s life savings. As a result, families often explore Medicaid planning strategies designed to preserve assets while still allowing an individual to qualify for Medicaid benefits. When an incapacitated person is under a guardianship established pursuant to Article 81 of the Mental Hygiene Law, a guardian generally must obtain court approval before implementing such planning. In Matter of M.L., 2009 NY Slip Op 52160(U), the Supreme Court, Bronx County, considered whether a guardian should be permitted to engage in Medicaid planning through a combination of gifts and a promissory note loan designed to preserve assets for the incapacitated person’s intended beneficiary while allowing the incapacitated person to become eligible for Medicaid coverage.

Background Facts

M.L. was an incapacitated person under an Article 81 guardianship. The court had previously appointed a guardian of both her person and property. The guardian sought authority to implement a Medicaid asset protection plan that involved gifting a portion of M.L.’s assets and loaning another portion through a promissory note arrangement.

Medicaid planning often involves difficult decisions about how assets should be used to pay for long-term care. When an individual becomes incapacitated and can no longer make financial decisions, those decisions may need to be made by a court-appointed guardian. In Matter of Shah (Helen Hayes Hosp.), 95 N.Y.2d 148 (2000), the New York Court of Appeals addressed whether a guardian could transfer all of an incapacitated spouse’s assets to the community spouse as part of a Medicaid planning strategy. A community spouse is the husband or wife of a nursing home resident who continues to live at home or elsewhere in the community rather than in a nursing home or other long-term care facility. The case became one of New York’s most significant Medicaid planning decisions and confirmed that guardians may engage in Medicaid planning on behalf of incapacitated individuals under appropriate circumstances.

Background Facts

Bipin Shah lived in New Jersey with his wife, Kashmira Shah, and their children. In 1996, he suffered a catastrophic injury while working in New York and lapsed into a coma. He was eventually transferred to Helen Hayes Hospital in Rockland County, New York, where he remained institutionalized with little expectation of recovery.

Articles Posted in Elder Law

Court Approved Medicaid Asset Protection Plan Through Gift and Loan Strategy. Matter of M.L., 2009 NY Slip Op 52160(U)

Guardian Allowed to Transfer Entire Estate for Medicaid Planning. Matter of Shah (Helen Hayes Hosp.), 95 N.Y.2d 148 (2000)