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<p style="text-align: justify;"><strong>Soran v. Addeo (N.Y. Sup. Ct., Nassau County, No. 19940/10).</strong></p>
<p style="text-align: justify;"><strong>Transactional Facts.</strong>  Since Mr. Addeo owned countable assets in excess of the amount required to receive Medicaid benefits, he entered into an agreement with his family to transfer his house to them in order to qualify for Medicaid.  This “Family Agreement” was executed by Mr. Addeo, Mrs. Addeo and their children.  The terms of the contract required Mr. Addeo to transfer his house to his wife, and then, upon Mr. Addeo’s death, Mrs. Addeo would transfer the property to their children, retaining only a life estate.  The contract expressly stated that this transaction was entered into in order for Mr. Addeo to become eligible for Medicaid benefits.</p>
<p style="text-align: justify;">Mr. Addeo subsequently transferred the house to his wife.  Upon his death, Mrs. Addeo decided not to transfer the house to her children, and they sued her for breach of contract.  In their complaint, the children requested that the New York trial court grant them a preliminary injunction preventing Mrs. Addeo from selling or encumbering the property.</p>
<p style="text-align: justify;"><strong>Court’s Analysis.</strong>  Mrs. Addeo readily admitted that the contract was only executed in order to commit Medicaid fraud (an issue that was not addressed during this hearing), and the court found that there was no evidence that the children had made any promises to their mother, or that the children suffered any detriment as a result of the “Family Agreement.”  Therefore, the court confirmed that "the fact that the [a]greement plainly states that it was executed in order to render defendant's husband eligible for Medicaid calls into question the motivation and credibility of all of the parties to that [a]greement."</p>
<p style="text-align: justify;">The New York Supreme Court denied a preliminary injunction, holding that there was no consideration for the agreement.</p>
<p style="text-align: justify;"><strong>Recommendations.</strong>  While there are effective asset-transfer and spend-down strategies available for people who plan to apply for Medicaid benefits, the implementation of such plans must be carefully executed.  If Mrs. Addeo had transferred the house to her children, she likely would have been denied Medicaid benefits for up to a five-year penalty period for the uncompensated transfer of assets.  However, there are contracts between family members that effectively shift wealth without causing ineligibility for benefits, such as the personal care services agreement, that are recognized and allowed by Medicaid.  Although the Medicaid rules are complex, proper advice regarding the rules and certain allowances can help applicants preserve their wealth while planning for their long-term care.</p>
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