Opinion ID: 1869856
Heading Depth: 1
Heading Rank: 5

Heading: Whether the Trust is Subject to Gist's Title XIX Medical Assistance Debt.

Text: The State claims Iowa Code section 249A.5 allows it to recover from the estate the monies it paid on Elenore's behalf under Title XIX. Section 249A.5 provides: The provision of medical assistance to an individual who is fifty-five years of age or older, or who is a resident of a nursing facility, intermediate care facility for persons with mental retardation, or mental health institute, who cannot reasonably be expected to be discharged and return to the individual's home, creates a debt due the department from the individual's estate for all medical assistance provided on the individual's behalf, upon the individual's death. Iowa Code § 249A.5(2) (2005). The Code defines estate under chapter 249A as property in which a recipient has any legal title or interest at the time of the recipient's ... death, to the extent of such interests, including but not limited to interests in jointly held property, retained life estates, and interests in trusts. Id. § 249A.5(2)( c ). Iowa adopted this recovery statute in 1994. 1994 Iowa Acts ch. 1120, § 10 (codified at Iowa Code § 249A.5(2) (1995)). The assets included within the expansive definition of estate are subject to probate. Iowa Code § 249A.5(2)( d ); see also In re Estate of Serovy, 711 N.W.2d 290, 293-94 (Iowa 2006) (holding the estate included assets held in joint tenancy and allowing for recovery of those assets). We have recently set forth the analytical framework to determine whether a trust should be subjected to Medicaid recovery under Iowa Code section 249A.5(2)( c ). Barkema, 690 N.W.2d at 53, 55-56. First, we must classify the trust at issue. Id. at 53. Next we must determine whether the beneficiary's interest in the trust is the kind of interest encompassed by section 249A.5(2)( c ). Id. at 55. Finally, we must decide whether that interest was present at the time of the beneficiary's death. Id. at 56. A. Classifying the Trust. In Barkema, we identified the two classifications of support trusts, a pure support trust and a discretionary support trust. Id. at 53-54. The Restatement of Trusts no longer refers to the classification of discretionary support trust as a discretionary support trust. Restatement (Third) of Trusts § 50 (2003). The Restatement now classifies a discretionary support trust as a discretionary trust with standards. Helene S. Shapo, George Gleason Bogert & George Taylor Bogert, The Law of Trusts and Trustees § 228, at 567 (3d ed. 2007). Regardless of whether we refer to a trust as a discretionary support trust or a discretionary trust with standards, they are the same animal. We explained the difference between a pure support trust and a support trust with standards as follows: A settlor creates a pure support trust [i]f a trustee is directed to pay or apply trust income or principal for the benefit of a named person, but only to the extent necessary to support him, and only when the disbursements will accomplish support.  In contrast, a settlor creates a [discretionary trust with standards] if the stated purpose of the trust is to furnish the beneficiary with support, and the trustee is directed to pay to the beneficiary whatever amount of trust income [or principal] the trustee deems necessary for his support. Generally, if the trust is a [discretionary trust with standards], the beneficiary has a right that the trustee pay him the amount which in the exercise of reasonable discretion is needed for his support ...; and the beneficiary can transfer this interest or his creditors may reach it, unless it is protected by a spendthrift clause. Barkema, 690 N.W.2d at 54 (citations omitted). The trust agreement created by the joint will of the Piries gave the trustee the discretion to distribute the income of the trust to Elenore as may be necessary to provide her with a reasonable standard of living, considering any other means of support or resources which she may have. The trust gave the trustee the discretion to invade the principal or corpus to provide her with a reasonable standard of living. The trust did not limit the principal and corpus payments to the mere support of Elenore, but allowed those payments to provide her with a reasonable standard of living. This language created a discretionary trust with standards. Id. B. Whether the Beneficiary's Interest in the Trust is the Kind of Interest Encompassed by Section 249A.5(2)( c ). We have stated that for purposes of section 249A.5(2)( c ) a beneficiary has an interest in a trust to the extent the assets are available to the trust beneficiary. Id. at 55. In a discretionary trust with standards, the beneficiary has the right to require the trustee to pay him the amount, which in the exercise of reasonable discretion is needed to support him. Id. at 54. Additionally, the beneficiary may transfer his interest and a creditor may reach it. Id. Accordingly, a beneficiary's interest in the discretionary trust with standards is the kind of interest encompassed by section 249A.5(2)( c ). Therefore, Elenore's interest in the trust is the kind of interest encompassed by section 249A.5(2)( c ), unless the spendthrift clause of the trust precludes the State from reaching that interest. [1] C. Whether the Beneficiary's Interest in the Trust was Present at the Time of the Beneficiary's Death. In Barkema, we determined that in a discretionary trust with standards, the beneficiary's interest is present at the time of the beneficiary's death. Id. at 56. The trustees have not contested the district court's finding that Elenore's interest in the trust was present at the time of her death. On appeal the trustees only contest whether Elenore's trust was a discretionary trust with standards and whether that interest was the type encompassed by section 249A.5(2)( c ). Thus, we agree with the district court that the trust is a discretionary trust with standards, the beneficiary's interest in the trust is the kind of interest encompassed by section 249A.5(2)( c ), and that interest was present at the time of her death.