THE ELDERLY SCORE BIG-TIME IN COURT
I barely want to say it out loud, but if you’ve noticed, my recent columns have been about court victories for the elderly. It wasn’t always that way. There was a time in the not so distant past when I thought elder law attorney couldn’t win on any issue in court. It appeared as if no one other than elder law attorneys saw the soundness of their arguments.
Well, the winning streak continued last week and in a big, big way. On Thursday, August 5th, the Supreme Court of New Jersey decided a case entitled In the Matter of Mildred Keri, a Mentally Incompetent Person. The magnitude of this decision for the elder law bar cannot be underestimated.
No sooner was the decision handed-down then elder law attorneys across the country were discussing it.
The issue in the Keri case was whether or not a child serving as the guardian for his mentally incapacitated parent can gift the parent’s assets to himself and his brother in order to hasten his mother’s eligibility for Medicaid, that is, whether the son, as guardian, can engage in Medicaid planning for his mother.
I have to tell you, I wasn’t too optimistic about the outcome of this case. The case has been on appeal for almost two years. I have been aware of the appeal the entire time, as the Elder Law Section of the New Jersey State Bar Association – a section of the bar to which I belong – participated in arguing the case.
Now, it’s not that I was pessimistic because I thought that the Keri children’s argument had no value; in fact, I thought it was a winning argument. But one thing they don’t teach you in law school and that you quickly learn after graduating from law school and practicing law is that the just argument doesn’t always win. As I mentioned, in the past, elder law case after elder law case lost in court. Until recently, things looked quite bleak to me as far as the ability of the elderly to seek justice in the court systems.
The Keri decision has changed my mind. Not only did the Keri court hold that an adult, financially self-sufficient child of a mentally incapacitated parent could gift the parent’s assets to himself and the parent’s other family members, the Court went out of its way to chastise the lower court’s characterization of Medicaid planning as a “scheme.”
In Keri, the Appellate Division – the court immediately below the Supreme Court – characterized Medicaid planning as a “scheme” to obtain at taypayers’ expense the benefits of the Medicaid program. The Supreme Court, likening Medicaid planning to tax planning, told the Appellate Division in no uncertain terms that since Medicaid planning is legal it is not the courts’ role to judge those who wish to engage in Medicaid planning.
This statement from the Court goes to something that I have mentioned several times in my column: While some people may debate the morality of Medicaid planning, Medicaid planning, like tax planning, is legal.
The Keri decision will have no beneficial financial impact for the Keri family since during the pendency of the appeal Mrs. Keri has expended every dime she had on her care. But, undoubtedly, the Keri children feel a profound sense of vindication from this decision. And, more importantly, their fight has plowed a path for thousands of future applications from guardians to engage in Medicaid planning on behalf of a disabled family member.
Court decisions often begin as personal disputes but end up shaping the rules that affect countless other families. Cases like this remind us that estate planning and elder law are not driven solely by statutes. Judicial decisions can change the practical realities of planning long after the case itself has faded from the headlines.