Estate Of Margaret Berto v. Dept. Of Social & Health Services
33591-7
| Wash. Ct. App. | Jul 19, 2016Background
- Margaret Berto and her husband placed assets (including their home) in a living trust; husband died in 2009.
- Husband’s will created a testamentary trust naming Berto sole beneficiary; trustees had discretion to distribute for her "health, education, maintenance and support."
- Trust limited Berto from being sole decisionmaker and restricted distributions to avoid causing ineligibility for government benefits.
- Berto allocated half the home's value to the testamentary trust via a promissory note and later sold the house, then paid the note and deposited roughly $120,000 into the testamentary trust.
- In June 2013 Berto applied for Medicaid; Washington Healthcare Authority (WHA)/DSHS denied eligibility because available assets exceeded the $2,000 limit. Berto appealed, arguing the testamentary trust was not an available resource.
- Administrative judge and the Court of Appeals affirmed that the testamentary trust counted as an available resource for Medicaid eligibility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the testamentary trust is an "available resource" for Medicaid eligibility | The testamentary trust is not truly available because Berto had limited control and the trust restricted distributions | DSHS: Trust principal is a resource when beneficiary has rights to benefit and controls exist; regulations treat such trusts as available | The court held the testamentary trust is an available resource and may be counted toward eligibility limits |
| Whether WAC 182-516-0100(5) exempts the testamentary trust | Berto: §(5)(b) exempts assets contributed other than by will | DSHS: §(5) applies to trusts established by client; provision only applies when third parties contributed assets | Court held §(5) does not apply because the testamentary trust was created by will and no third-party contributions existed |
| Whether WAC 182-516-0100(11) excludes the principal from counting | Berto: §(11) exempts principal if beneficiary lacks control and trust funded by someone other than client/spouse | DSHS: §(11) requires both lack of control and third-party funding | Court held §(11) does not apply because Berto was co-trustee (had control) and funds came from her or her husband |
| Whether trust principal should be treated as a transfer rather than an available asset | Berto: restrictions on distribution render principal nonavailable | DSHS: Principal is available until it can no longer be distributed; transfers occur when distribution is impossible | Court held principal remained available because distributions could still be made to Berto under trust terms |
Key Cases Cited
- Campbell v. Dep't of Soc. & Health Servs., 150 Wn.2d 881 (discussing agency factual verities and review)
- Skamania County v. Columbia River Gorge Comm'n, 144 Wn.2d 30 (standard of de novo review for agency legal conclusions)
- Overlake Hosp. Ass'n v. Dep't of Health, 170 Wn.2d 43 (rules for interpreting agency regulations; plain language controls)
- State ex rel. Wirt v. Superior Court, 10 Wn.2d 362 (defining beneficiary rights to beneficial enjoyment of property)