Donald D. Vanarelli, Esq. represented the plaintiff in a seminal estate planning/guardianship case entitled In re Keri, 181 N.J. 50 (2004). In Keri, an adult child sought guardianship of his mother and her estate and proposed to gift some of her assets to himself and his brother so that mother could qualify for Medicaid while in a nursing home. Reversing lower court decisions, the state Supreme Court ruled, for the first time, that the mother's assets could be transferred to her children as part of an estate plan to help her qualify for government nursing home benefits. This ruling was characterized by the Star Ledger newspaper as having "broad implications for those with elderly relatives suffering from Alzheimer's and other kinds of dementia...".
The concept of "Medicaid planning," involving the strategic transfer of assets aimed at hastening an individual's eligibility for Medicaid, has been viewed as a prudent estate planning technique by which an individual may preserve assets for his or her loved ones. As a result of the Appellate Division decision in Keri, however, the right of an incapacitated person to engage in Medicaid planning through his or her guardian was called into question. 356 N.J. Super. 170 (App. Div. 2002). In reversing the Keri appellate court, the NJ Supreme Court eliminated any question as to the continued viability of Medicaid planning as an estate planning tool for guardians.
The New Jersey Supreme Court found that the lower court decision in In re Trott, 118 N.J. Super. 436 (Ch. Div. 1972), "impliedly established" the presumption in favor of Medicaid planning by recognizing that maximizing funds available to a ward's beneficiaries (by reducing amounts owing to the state) is in the best interests of the ward's estate. 181 N.J. at 63.
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