Widow With Dementia Must Get Inheritance

(CN) - A South Dakota man cannot keep assets from his dementia-suffering mother to ensure that Medicaid covers her long-term care, the state Supreme Court ruled.

Eugene and Arline Shipman were married for more than 50 years, but she required full-time care because of dementia in 2008 and moved into a nursing home.

The Department of Social Services denied Arline's application for Medicaid long-term coverage because of the value of her and Eugene's "countable resources."

After Eugene spent almost $100,000 on Arline's nursing-home care the next year, Social Services found that the Shipmans now qualified for Arline to get long-term Medicaid assistance.

While Eugene was still paying for Arline's care out of pocket, he executed a will that disinherited her because of the "sufficient consideration" he had given her to date.

Their son, David, who served as Arline's attorney-in-fact, also cited the nursing home care in another document disclaiming any right Arline might have to inherit from Eugene.

Eugene unexpectedly died before Arline in July 2010, leaving half of his estate to his grandchildren and the other half to David.

Arline's guardian ad litem petitioned for the 50 percent share of Eugene's estate to which she was eligible under South Dakota law, but a Gregory County denied the guardian's disclaimer and also refused to revoke Arline's disclaimer.

The Department of Social Services intervened but did not prevail on reconsideration.

It fared better on appeal to the South Dakota Supreme Court, which concluded last week that Arline's entitlement to her share "is no longer a matter of equity: it is a matter of right."

"More importantly, Arline's elective share could not be satisfied by money used during the marriage to pay Arline's nursing home expenses because those funds were utilized to fulfill Eugene's and Arline's duty to financially support themselves and each other," Justice Steven Zinter wrote for the five-person court.

Inheriting that share also serves Arline's best interests, the panel found.

"The estate does not dispute that Arline's failure to pursue her elective share would compromise Arline's Medicaid eligibility for nursing home care," Zinter wrote. "Thus, if the disclaimer were not revoked, Arline may lose Medicaid eligibility in addition to not receiving her fifty percent share of the augmented estate. Under the circumstances, it was in Arline's best interests to revoke the disclaimer."

Revoking the disclaimer furthermore does not prejudice Eugene's beneficiaries since Arline had a right to take her share, according to the 17-page ruling.

"We finally note that Medicaid is for 'individuals receiving nursing home ... care services [that] are in fact poor and have not transferred assets that should be used to purchase the needed services before Medicaid benefits are made available,'" Zinter wrote, quoting precedent. "'Medicaid ... is not to be used as an estate planning tool.' But here, Arline's disclaimer was used as an estate planning tool. The disclaimer was executed contemporaneously with Eugene's will in an attempt to obtain Medicaid benefits while simultaneously transferring the value of Arline's elective share to the Shipmans' son and grandchildren."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit