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In re Petition for Advice and Direction Pursuant to SCPA 2107

Surrogates Court, Albany County

February 22, 2018

In the Matter of the Petition for Advice and Direction Pursuant to SCPA 2107 for the Guardianship Pursuant to SCPA article 17-A of Jennifer Lasher Tinsmon. Christopher J. Lasher and Helena Lasher, Petitioners.

          Edward V. Wilcenski, Esq., Attorney for Petitioners, Wilcenski & Pleat, PLLC, 5 Emma Lane, Clifton Park, New York 12065

          Albert Dingley, Esq., Assistant County Attorney, Albany County Department of Social Services, 112 State Street, Albany, New York 12207

          JulieAnn Calareso, Esq., Guardian ad Litem for Jennifer Lasher Tinsmon, The Shevy Law Firm, LLC, 7 Executive Centre Drive, Albany, New York 12203


         Before this Court is an application by petitioners Christopher J. Lasher and Helena Lasher for advice and direction pursuant to SCPA 2107. The guardian ad litem assigned for Jennifer Lasher Tinsmon has issued her report and respondent Albany County Department of Social Services has filed an answer/objections to the petition. The matter is now submitted for decision.

         By way of background, Tinsmon is a 50-year-old resident of Albany County. She is unmarried and has three children ranging in age from 12 years to 19 years of age. She sustained a traumatic brain injury in February 2011 as a result of personal injury. Shortly thereafter, petitioners, her parents, were appointed as the guardians of her person and property pursuant to SCPA article 17-A. At that time, the mortgaged residence in which Tinsmon still resides was owned jointly with right of survivorship by Tinsmon and her mother, petitioner Helena Lasher (hereinafter Lasher). Tinsmon also owned bank accounts in the approximate amount of $82, 000 and a vehicle. By order of this Court dated August 5, 2011, a first party supplemental needs trust was established for Tinsmon's benefit, and petitioners were appointed as trustees of the trust. The trust, which includes a pay-back provision on Tinsmon's death for outstanding Medicaid payments made on her behalf, was funded with cash assets so that she would be eligible to participate in government benefit programs, such as the Traumatic Brain Injury Waiver program (see 42 USC 1396p[d] [4] [A]; EPTL 7-1.12; Social Services Law § 366 [2] [b] [2] [iii]).Tinsmon's interest in her residence was not transferred to the supplemental needs trust, as a residence is an exempt asset which may be retained by an individual (see 20 CFR 416.1212; 18 NYCRR 360-4.7). The trust has paid mortgage payments and other carrying costs for the real property since its formation. In 2017, the trust received $1, 345, 310 in settlement funds from a Supreme Court action related to Tinsmon's injury. Pursuant to the terms of that settlement, the Department received $375, 000 in full satisfaction of its outstanding Medicaid lien.

         Petitioners have now commenced a proceeding for advice and direction under SCPA 2107 with regard to Tinsmon's residence. The property was purchased in December 2010, before Tinsmon's injury, as the residence for Tinsmon and her young children, and was titled to Tinsmon and Lasher as joint tenants. Both owners were mortgagors on the original mortgage on the property in the amount of $225, 028.00, and, as of August 31, 2017, the principal balance was $196, 835.12. Lasher does not reside in the residence, but has personally paid one half of the mortgage payments each month from her personal checking account, while petitioners have paid the other half from the trust assets. Lasher paid a total of $14, 096.44 towards the mortgage. Because Lasher is not a disinterested third party, and is a guardian and trustee for Tinsmon, petitioners seek approval from the Court to have the trust pay to purchase Lasher's interest in the property, so that Lasher's half interest in the residence may be transferred to the guardians of the property and owned solely by Tinsmon. The proposed payment to Lasher for her interest in the property is the sum of $14, 096.44. Petitioners assert that ownership of the property will not affect Tinsmon's participation in the Traumatic Brain Injury Waiver program, or her eligibility for Supplemental Security Income, as the property is an exempt resource for eligibility purposes (see 20 CFR 416.1212; 18 NYCRR 360-4.7; Social Security Program Operations Manual System [POMS] SI 01130.100). Petitioners also request that the Court confirm that, as guardians, they have ongoing authority to withdraw, transfer and assign nonexempt guardianship property to the trust so as to maintain Tinsmon's ongoing eligibility for means-tested benefits.

         The Department does not oppose the payment, or the amount of the payment, to purchase Lasher's half interest in Tinsmon's residence. The Department's opposition to the petition, instead, is to ownership of the purchased interest by Tinsmon, through her guardians. The Department believes the real property should be transferred to the trust and titled in the names of the co-trustees. In support of its argument, the Department relies upon the Program Operation Manual System (POMS) for the Social Security Administration, which provides that, if trust funds are used to purchase a house, "the individual (or the trust)" must be shown as the owner (see POMS SI 01120.201 [F] [1]). The guardian ad litem recommends that the Court approve the purchase, with trust assets, of Lasher's interest in the residence, and title the property to Tinsmon through her guardians, and not title the property to the trust. The guardian concludes that the proposal is in Tinsmon's best interest, as the payment sought by Lasher is not unreasonable or unfair, nor would the sale jeopardize Tinsmon's ongoing eligibility for means-tested government benefits. The guardian ad litem also recommends that the Court clarify that petitioners have the authority, as guardians, to transfer assets to the trust, but require that assets which are exempt for eligibility for means-tested government benefit programs continue to be held by the guardians, so as not to defeat any potential testamentary or intestacy distribution of such assets on Tinsmon's death.

         Arguing against transfer of title of the residence to the trust, the guardian ad litem asserts that Tinsmon purchased the property for herself and her three young children, and would have intended to pass the home or its resulting equity to her children in the future. The guardian ad litem opines that titling the property in trust would not be in Tinsmon's best interest because it would thwart the potential inheritance by her children of the exempt asset, and instead, subject it to payback for any Medicaid payments accrued at the time of her death. With respect to Medicaid estate recovery, the guardian states that Medicaid does not have a right to recover for benefits paid before the Medicaid recipient reaches age 55. She notes that the trust has a payback provision for all benefits paid regardless of age; however, she states that assets owned by Tinsmon individually are not subject to estate recovery except for benefits paid after age 55 and for benefits paid within the ten-year period immediately preceding her death. According to the guardian, titling the property in the name of the trust would benefit the Department, by increasing the funds available from which it can be repaid, and would harm Tinsmon as it would divest her of her opportunity to engage in estate planning. The guardian points out that Tinsmon's present one-half ownership in the exempt residence has not caused any eligibility problems, thus, ownership of the entire interest would also not cause eligibility problems.

         With respect to a trust established for the benefit of or on behalf of an individual, POMS provides that "[i]f funds from a trust that is a resource are used to purchase durable items, e.g., a car or a house, the individual (or the trust) must be shown as the owner of the item in the percentage that the funds represent the value of the item. When there is a deed or titling document, the individual (or trust) must be listed as an owner" (POMS SI 01120.201 [F] [1] [emphasis added]). While the Department argues that this section indicates that the property must be owned by and titled in the trust, the plain language of the provision provides that when trust funds are used to purchase a house, either the individual or the trust must be the owner, and the provision does not appear to promote one type of ownership over the other. Presumably, the trustees could expend funds to purchase a house outright for Tinsmon to be the sole owner; thus, the trustees should also be able to purchase Lasher's half-interest and name Tinsmon as the sole owner. While there may be reasons why trustees choose to hold title to real property in the trust's name, the Department has failed to establish that such a practice is required in all circumstances. Here, Tinsmon and Lasher presently own the home in fee simple as joint owners with survivorship rights, and have owned it in that form since before the trust's creation. Accordingly, Tinsmon already has legal title to the exempt residence. It is noted that, with respect to determining the eligibility of disabled individuals to receive supplemental security income, one's home is not included as a resource, regardless of its value (see 42 U.S.C. § 1382b [a] [1]; see also Social Security Program Operations Manual System [POMS] SI 01130.100 [B] [1]). Nonetheless, Medicaid paid to a recipient who is age 55 or older (which Tinsmon is not) is recoverable from the estate of the recipient upon death (see Social Service Law § 369). If Tinsmon should die after age 55, the Department may still recover against Tinsmon's real property at that time should the trust funds be insufficient to repay Medicaid benefits paid on her behalf after she reaches age 55.

         With respect to petitioners' request for advice and direction, the Court finds that although one of the petitioners is an interested party in the proposed transaction, the transaction appears fair and reasonable and, as it will not affect Tinsmon's eligibility for benefits, is in her best interest. Accordingly, the Court approves of the proposed transaction.

         Petitioners also request that the Court confirm that they have ongoing authority to withdraw, transfer and assign guardianship property to the trust so as to maintain Tinsmon's ongoing eligibility for means-tested benefits. The guardian ad litem requests that the Court specify that the guardians are only permitted to transfer those assets which are not exempt from means-tested benefits, and not any assets which are exempt and could pass to Tinsmon's heirs. The Court agrees that it is unnecessary for petitioners to transfer exempt assets into the trust. Otherwise, petitioners, as guardians, have continuing authority to transfer nonexempt guardianship property to the trust in order to preserve Tinsmon's eligibility for benefits.

         Finally, the guardian ad litem has submitted an affirmation of legal services along with her report. The Court finds that her requested fee of $852.50 is reasonable and orders petitioners to pay said ...

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