Tidrow v. Director, Missouri State Div. of Family Services

• Citation: 688 S.W.2d 9
• Decision Date: 22 January 1985
• Docket Number: No. 48250,48250
• Court: Court of Appeal of Missouri (US)
• Parties: Medicare & Medicaid Guide P 34,525 James Bruce TIDROW, Petitioner-Appellant, v. DIRECTOR, MISSOURI STATE DIVISION OF FAMILY SERVICES, Respondent-Respondent.

Page 9

688 S.W.2d 9

Medicare & Medicaid Guide P 34,525

James Bruce TIDROW, Petitioner-Appellant, v. DIRECTOR, MISSOURI STATE DIVISION OF FAMILY SERVICES Respondent-Respondent.

No. 48250.

Missouri Court of Appeals,

Eastern District,

Division Two.

Jan. 22, 1985.

Motion for Rehearing and/or Transfer to

Supreme Court Denied March 26, 1985.

Application to Transfer Denied

April 30, 1985.

Ramon J. Morganstern, Michael J. McKitrick, Barbara Blee Maille, Clayton, for petitioner-appellant.

Paul T. Keller, Public Counsel, Jefferson City, for respondent-respondent.

STEPHAN, Judge.

James Bruce Tidrow appeals from a judgment of the Circuit Court of St. Louis County affirming a determination by the Director of the Division of Family Services that he is not entitled to medical assistance to pay the costs of residential care as provided by § 208.151, RSMo. ¹ The Director's rejection of appellant's application for assistance is based on the Director's finding that "claimant has resources in excess of the maximum allowed." As developed at a hearing conducted by a hearing officer appointed by the Director, appellant is the primary beneficiary of a spendthrift, discretionary trust created by his father's will. The assets of the trust, consisting mainly of a residence and proceeds of life insurance policies, were valued at approximately $175,000. Imputing the value of the trust assets to appellant, the Director denied benefits to appellant on the authority of § 208.010-2 (4) which prohibits such payments to anyone who owns cash or securities in the amount of $1000 or more and (5) which prohibits payments to anyone who is the record or beneficial owner of any kind of property of a value in excess of $20,500. For reasons hereinafter set forth, we believe that it was error to impute the value of the trust assets to the appellant. Accordingly, we reverse and remand to the Circuit Court to remand to the Director for a redetermination of the issues, as provided by § 208.100, RSMo Cum.Supp.1981 and § 208.110, RSMo 1978.

Appellant, known as "Bruce" Tidrow, was 34 years of age at the time of the hearing. He has been severely mentally retarded since birth, has an IQ of 29 and a mental age of five years, one month. Appellant was cared for at home until appellant's mother became critically ill. In early May of 1980, appellant's father, Earl Tidrow, contacted the Family Service Center for emergency respite day care for Bruce. Mr. Tidrow was referred to the Missouri Department of Mental Health Regional Center, where he applied for and received financial assistance. At that time the cost of day care for five days a week was $559.36 per month. The Department of Mental Health also paid for adult developmental classes at the St. Louis Association for Retarded Citizens.

Appellant's mother died in July, 1980. Several weeks later Earl Tidrow applied for future residential services for his son Bruce, which at that time cost $1234.00 per month. At the time of the hearing, the cost of such care had increased to approximately $2,200 per month. Mr. Tidrow was aware that funds were generally available for financial assistance of residential-type programs and that Bruce would have to be institutionalized for as long as he lived. A week after this initial application, Earl Tidrow executed his last will and testament, leaving the bulk of his estate in a discretionary, spendthrift trust for the benefit of his son, Bruce, and secondarily for the benefit of his other son, Kim, with the remainder to go to Kim free of trust upon Bruce's death.

Earl Tidrow was hospitalized in June, 1981, and died on July 3, 1981. Bruce was considered for immediate placement in the residential program and, after a two-week trial period, was accepted into the program. Medical assistance was applied for on Bruce's behalf on August 1, 1981. An attorney in the office of the general counsel of the Department of Social Services gave an opinion that the assets of the trust were "available" to Bruce, and the application was denied by the Division of Family Services on October 6, 1981.

Appellant contends that the trial court erred in affirming the decision of the Missouri State Division of Family Services because appellant's interest in the trust is not an "available resource," and thus the decision of the Director of the Missouri State Division of Family Services was arbitrary and capricious, not supported by substantial and competent evidence, or authorized by law.

The trust here in question is a "true spendthrift trust" as described in McNeal v. Bonnel, 412 S.W.2d 167, 170 (Mo.1967) in that it expressly provides that no beneficiary may alienate his interest therein and that no creditor of a beneficiary may reach such interest in satisfaction of any claim against a beneficiary. In the words of the instrument:

Neither the principal nor the income of the trust estate created herein shall be liable for the debts of any beneficiary hereof, nor shall the same be subject to seizure by any creditor of any beneficiary under any writ or proceeding at law or in equity, and no beneficiary shall have any power to sell, assign, transfer, encumber or in any other manner to anticipate or dispose of his or her interest in the trust estate or the income produced thereby.

Similarly, the trust is wholly discretionary in that it authorizes, but does not require, the trustee ² to pay from interest or principal any amount the trustee deems necessary, in its discretion, to provide for Bruce's "reasonable comfort" during his life. ³ The trustee is also authorized to pay to Bruce's younger brother, Kim, such amounts as may be warranted by his needs or by a "medical or family emergency," subject to the trustee's determination that Bruce's welfare would not be jeopardized. Upon Bruce's death, the trustee is directed to pay the trust estate, free of trust, to Kim, if living, or to his descendants. The trust does not require the payment of any set amount of principal or interest at any time to any beneficiary; any interest not paid out is to be turned into principal.

The respondent Director candidly concedes in his brief that, if Earl Tidrow were living, his net worth would not disqualify his adult retarded son from receiving the medical assistance benefits here in issue. This is consistent with § 208.010-3 which provides:

In determining eligibility and the amount of benefits to be granted under federally aided programs, the income and resources of a relative living in the home shall be taken into account only to the extent the income, resources, support and maintenance are available for the support of the claimant unless the relative is the claimant's spouse or minor child living in the home, or is the parent of a minor child for whom benefits are claimed. ⁴ Against such factual and statutory backdrop we pursue our basic task of determining whether the Director's conclusion that the assets of the trust are "available" to Bruce is legally tenable. See Pummill v. Missouri Division of Family Services, 674 S.W.2d 647, 648 (Mo.App.1984). Our determination turns on whether such conclusion is reasonably consistent with the settlor's intent in creating the trust. Almost a century ago, our Supreme Court said:

In construing wills, the familiar rule prevails that they are to be construed as a whole; liberally construed; construed with reference to the intention of the testator; and unless that intention, if carried out, will violate some positive rule of law, or subvert some rule of public policy, such intention must be allowed to control, and be effectuated by the courts. And, in construing wills which create trusts, the same liberality of construction as to such trusts prevails.

Partridge v. Cavender, 96 Mo. 452, 9 S.W. 785, 786 (1888). The concept that the intention of the settlor is the key to the construction of a trust and that the intention will be effectuated unless contrary to law or public policy continues to prevail. See Webb v. St. Louis County National Bank, 551 S.W.2d 869, 875 (Mo.App.1977); First National Bank of Kansas City v. Waldron, 406 S.W.2d 56, 58 (Mo.1966); and First National Bank of Kansas City v. Hyde, 363 S.W.2d 647, 652 (Mo.1962), where the court said, "In determining the meaning of a trust provision, the paramount rule of construction is that the settlor's intent is controlling and such intention must be ascertained primarily from the trust instrument as a whole."

From the instrument involved here, it is abundantly clear that Bruce's father intended that payments from the trust to or for Bruce were to supplement, rather than supplant, the benefits to which Bruce would otherwise be entitled. As indicated above, the Director has conceded that, if Earl Tidrow were alive, he would not have to deplete all of his assets before Bruce could qualify for benefits from the State. Thus, the conclusion is compelling that the father intended his trust estate, the existence of which was triggered by his death, to do for Bruce what his father did for him in life: to supplement the benefits received from the State. Earl Tidrow was obviously aware that Bruce's age and good physical health augured a long life expectancy for him, that Bruce will need custodial care for as long as he lives, and that the cost of such care was increasing. In view of such facts, it would not comport with common sense to have created a gift of total support which would be wholly dissipated in a matter of a few years. On the contrary, the repeated references in the trust to Bruce's "lifetime" and "for so long as [Bruce] may live," as well as the provision that, upon Bruce's death, the remaining assets would be paid to Kim or his descendants argue forcefully for the conclusion that settlor's intent was that the trust would continue throughout Bruce's life and that it would be supplementary to support received from the State. A contrary conclusion would totally frustrate the settlor's intent that his other son Kim...