In re Corn
Decision Date | 02 June 2016 |
Docket Number | No. CV–15–902,CV–15–902 |
Citation | 493 S.W.3d 311,2016 Ark. 229 |
Parties | In the Matter of James S. Corn, a Disabled Person |
Court | Arkansas Supreme Court |
Winburn, Mano, Schrader & Shram, by: Rebecca H. Winburn, Benton, and John G. Shram; and Taylor & Taylor Law Firm, P.A., Little Rock, by: Andrew M. Taylor and Tasha C. Taylor, for appellant.
No response.
Appellant James S. Corn, age fifty-three, brings this appeal from an order of the Pulaski County Circuit Court denying Corn's petition to establish a special-needs trust pursuant to 42 U.S.C. § 1396p(d)(4)(A)
. Corn is disabled because of a head injury from which he suffers short-term memory loss. Because of the severity of his injury, he receives Social Security Disability (SSD) and Supplemental Security Income (SSI). Corn's eligibility makes him automatically eligible for Medicaid. However, SSI has an asset test which states that Corn would become ineligible if he were to have assets of more than $2,000. Because of this, Corn's partner, Ms. Yelvington, now deceased, established a special-needs trust for him.
Yelvington also designated Corn as a beneficiary on life insurance policies and her bank accounts. There is approximately $260,000 that was not transferred into the special-needs trust created by Yelvington, and because Corn is designated as the beneficiary on these assets, they would pass directly to Corn upon Yelvington's death. Because these assets would be passing directly to Corn rather than through a special-needs trust, Corn would be ineligible to receive SSI benefits.
42 U.S.C § 1396p(d)(4)(A)
.
On April 10, 2015, Corn filed a “Petition to Establish a 42 U.S.C. § 1396p(d)(4)(A) Special Needs Trust” for his benefit. In that petition, Corn stated that he is entitled, pursuant to the statute, to use a safe-harbor special-needs trust to hold his inherited monies to preserve his eligibility for public benefits. Corn attached a copy of the proposed “James Corn D(4)(A) Special Needs Trust” to the petition and stated that the trust meets all of the criteria for the establishment of a (D)(4)(A) trust, including (1) that Corn is under the age of 65; (2) that he is disabled pursuant to the provisions of the Social Security Act; (3) that the trust will be funded with Corn's assets; (4) that Corn is the sole beneficiary of the trust; (5) that the trust will be established by the court as allowed under the statute; (6) that the trust contains the requisite payback language to the State of Arkansas for benefits paid for the primary beneficiary's care under the Medicaid program; (7) that the trust is irrevocable; (8) that the trust contains a spendthrift clause; and (9) that Corn cannot direct the trustee to use trust principal or income for his support and maintenance. “Schedule A” of the special-needs trust includes approximately $260,000 in assets from Yelvington's life insurance policies and bank accounts on which Corn is the designated beneficiary.
A hearing was held on June 2, 2015, in the Pulaski County Circuit Court. At the time of the hearing, Yelvington had passed away and her estate was in probate. Corn had not yet received any funds from her estate or from her beneficiary designations. At the hearing, Corn's attorney stated that when Yelvington set up the special-needs trust for Corn, she unintentionally left out a number of assets that would pass directly to Corn. The circuit court asked counsel for Corn what other assets were in the special-needs trust set up by Yelvington. Counsel for Corn stated that he was unprepared at that time to share a report of the assets passing through Yelvington's trust administration or probate. The circuit court then stated as follows:
At the conclusion of the hearing the circuit court stated,
The circuit court entered the order denying Corn's petition that same day. On June 11, 2015, Corn filed a motion for reconsideration and brief in support. The motion for reconsideration was denied on July 10, 2015. In its order denying Corn's motion for reconsideration, the circuit court found that the establishment of the trust would be against Arkansas public policy and that there was insufficient evidence presented to support that a special-needs trust should be established. On August 7, 2015, Corn filed a timely notice of appeal.
In this case, the circuit court ruled that the D4A trust was against public policy of the State of Arkansas. We disagree. D4A trusts are clearly provided for by 42 U.S.C. § 1396p(d)(4)(A)
, and although a state's participation in the federal Medicaid program is voluntary, states that choose to participate must comply with the requirements of the federal Medicaid statute. Ark. Med. Soc'y, Inc. v. Reynolds, 6 F.3d 519 (8th Cir.1993). Therefore, the Arkansas Department of Human Services, in its Medical Services Policy Manual, has issued rules that comply with 42 U.S.C. § 1396p(d)(4)(A). Rule 016.20.1–H of the policy manual states:
serves important public policy considerations; namely, that reimbursing the State for funds it has expended through Medicaid for medical assistance increases the availability of funds for the future medical assistance to other needy persons.
(citing Estate of Jobe, 590 N.W.2d 162 (Minn.Ct.App.1999) ).
.
Similarly, in In re Woolworth, 76 A.D.3d 160, 903 N.Y.S.2d 218 (2010)
, a disabled petitioner, as administratrix of the estate of her husband, petitioned to establish a special-needs trust to be funded with her entire share of the proceeds she received ($283,438.30) as a result of a settlement in a wrongful-death action on behalf of her deceased husband. Petitioner was disabled and under the age of 65 but did not have a parent, grandparent, or guardian who could establish a D4A trust on her behalf. Id. The Surrogate's Court ruled that it would only allow the...
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