Court Opinion

ID: 6774544
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:48:08.647937+00
Date Added: 2024-06-11T16:02:46.959606
License: Public Domain

Stratton, J.,
dissenting. I respectfully dissent from the majority opinion. Where a child has reached the age of majority and the obligation to support has ceased, I strongly believe it would be against public policy to allow a parent to create a trust where the trust income or trust corpus can go to the child at the discretion of the trustee, except when such distributions would render the child ineligible for medical assistance from the government.
The purpose of the trust, established by Young’s father, was to generously and liberally provide income to Young in all circumstances, except where she might be entitled to receive Medicaid or Medicare benefits. The trust contained the exclusionary provision which stated:
“The Trustee shall pay such amounts of the net income and, if necessary, principal of this Trust as she deems necessary for the benefit of JANET LEE YOUNG, provided, however, that the Trustee shall not make any distributions * * * which shall render her ineligible or cause a reduction in * * * Medicare, and Medicaid [benefits].”
The obvious thrust of this language is an attempt to bar the trustee from making any distribution that would render Young ineligible for public assistance. Otherwise, however, distributions of the trust income or principal were to be made “liberally and generously.”
Young entered a nursing home in August 1993. The trustee was billed for Young’s stay. The trustee, citing the trust language, refused to pay the bill. The trust had a res of $53,000. Young then sought Medicaid eligibility to pay the bill. Under the provisions of the trust, the remainder of the trust corpus would pass to any of Young’s surviving children upon her death. As a result, Young had assets that were available to pay at least some of the nursing home bill. However, pursuant to the trust, those assets would pass to her children. The taxpayers were left with the burden of caring for Young.
*553It would be a different scenario if such a child had already entered the nursing home and a grantor chose not to give any of his assets to that child. While certainly not commendable, a grantor is free to do with his inheritance as he sees fit, as long as it is not contrary to public policy. However, these assets had already transferred by trust to Janet Young and were to be “liberally and generously” used for her benefit, unless the government could pick up the tab. I would find that to allow a trust to distribute income or principal for virtually any purpose except for purposes that would eliminate or reduce Medicaid is against public policy because it shifts the beneficiary’s financial responsibility to the taxpayers despite the fact the beneficiary has the financial means to pay for his or her own medical expenses. Medicaid is a safety net for those who are destitute, not insurance coverage for those who can pay their medical expenses like Young. Obviously, the limiting language of this trust is against public policy because it circumvents the purpose behind Medicaid. Where trust language is against public policy, the court has a duty to nullify such trust language. See Bob Jones Univ. v. United States (1983), 461 U.S. 574, 591, 103 S.Ct. 2017, 2028, 76 L.Ed.2d 157; United States v. Taylor (N.D.Cal.1966), 254 F.Supp. 752.
F.E. Sweeney, J., concurs in the foregoing dissenting opinion.