Fleming & Curti, P.L.C. - Court: Guardians Not Required To Engage in Medicaid Planning

FEBRUARY 2, 2009 VOLUME 16, NUMBER 28

Court: Guardians Not Required To Engage in Medicaid Planning

A nursing home resident has significant assets, and a wife living in the community. Should the resident’s assets be used for both his own care and his wife’s support? Should his financial affairs be arranged to hasten his qualification for Medicaid assistance with the cost of care? If a conservator has been appointed to manage his affairs, does the conservator have an affirmative duty to arrange for early Medicaid qualification — that is, to engage in “Medicaid planning?”

Donald Domey became incapacitated in 2003 as a result of a stroke. He was moved to Greenbrier Terrace Rehabilitation Center in Nashua, New Hampshire. His wife Judith Domey remained in the family home. His brother and a professional fiduciary were appointed co-guardians of the person and estate (what in Arizona would be referred to as co-guardians and co-conservators).

The relationship between the co-guardians and Mrs. Domey was strained from the start. Eventually the guardians gained control of Mr. Domey’s assets, and they began paying for his long-term care. His assets were largely spent down by 2006, at which point he became eligible for Medicaid assistance. The guardians then filed an accounting with the local probate court.

Mrs. Domey objected to the accounting. She argued that her husband had a duty to support her, and his guardians therefore had a duty to consider her needs in their planning for Mr. Domey’s estate. According to her argument, that included a duty to take reasonable steps to get Mr. Domey qualified for Medicaid more quickly than they had actually accomplished the task — including by making transfers to her and paying for her needs with Mr. Domey’s money.

The probate court agreed, and ordered the co-guardians to pay (out of their own pockets) for the support and assets she would have received had they planned more quickly. The judge set the damages payable to Mrs. Domey at a total of $118,253.

The New Hampshire Supreme Court disagreed and reversed the judgment. Although New Hampshire law does include a provision requiring a married person to support his or her spouse, ruled the Justices, the guardianship code directs guardians to primarily consider their ward’s interests instead. “The guardianship statute does not … impose a fiduciary duty upon a guardian to impoverish his or her ward in order to qualify the ward for Medicaid,” said the court.

Though the law permitted the guardians to initiate proceedings for asset transfers and other planning steps, the high court ruled that it did not require such steps be taken. The judgment against the co-guardians was reversed. In Re Guardianship of Domey, October 29, 2008.

The New Hampshire court's analysis focused on the guardian's duties, rather than a spouse's obligation. The equivalent statute in Arizona is probably A.R.S. sec. 14-5401, which simply provides that a conservator can be appointed when necessary to provide "support, care and welfare" of the ward "or those entitled to be supported by" the ward. The implication of the Domey case (assuming the same logic were to be applied by Arizona courts) is that, while a conservator should consider the obligation of support, the conservator's primary concern should be the present well-being of the ward. A spouse may have the power to compel support in an appropriate court proceeding, but the conservator probably does not have an affirmative duty to maximize that support.

One major difference between Arizona and New Hampsire, of course, is that Arizona is a community property state (see A.R.S. sec. 25-211). Would that have altered the outcome if Mr. and Mrs. Domey resided in Arizona? Perhaps. It might be that Mrs. Domey was deemed to own as much as a one-half interest in the property. More fundamentally, she might have had the power to manage that property during her husband's incapacity -- and the probate court would have been permitted (but not required) to formalize that management arrangement (see A.R.S. sec. 14-5426(B)).