Estate of Scheidecker v. DPHHS, 2021 MT 158

Background:

Marilyn and her sister Glenda transferred their half‑interests in a Billings house into the Scheidecker‑Martin Irrevocable Trust (SM Trust) in 2008; the house is the trust's sole asset.
Trust terms: irrevocable (Marilyn waived any right to amend/revoke), trustee expressly prohibited from invading principal for a settlor’s benefit, and stated material purpose is to supplement—not supplant—governmental benefits like Medicaid.
Marilyn entered long‑term care and applied for Medicaid in 2017; the Department denied eligibility treating Marilyn’s one‑half interest in the trust corpus as a countable resource.
Administrative Law Judge upheld denial (treating the trust as revocable); the District Court found the trust irrevocable but nevertheless held the corpus countable under 42 U.S.C. § 1396p(d)(3)(B) because beneficiaries might terminate the trust and give property to Marilyn.
Montana Supreme Court reversed: applying Montana trust law and federal Medicaid statute, it held no circumstances exist under which payments from the SM Trust’s corpus could be made for Marilyn’s benefit, so the corpus is not a countable Medicaid resource (though trust income may be).

Issues:

Issue	Estate (Marilyn)	Department	Held
Whether SM Trust corpus is a countable Medicaid resource under 42 U.S.C. § 1396p(d)(3)(B)	Corpus is not available—trust bars invasion of principal and settlor waived revocation, so no circumstances permit payments from corpus to Marilyn	"Any circumstances" includes hypothetical/improbable routes (e.g., mortgage, sale proceeds, beneficiaries’ actions, Conditional Agreement) making corpus available	Reversed: no circumstances exist under the trust’s terms by which corpus could be paid to/for Marilyn; corpus not countable (income remains countable)
Whether beneficiaries’ (or a court’s) post‑establishment termination/ distribution could render corpus available	Trust language and material purpose to supplement Medicaid prevent termination for settlor’s benefit; termination inconsistent with settlor intent	Beneficiaries could consent under state law to terminate or distribute, then give property to Marilyn, making corpus available	Trust’s express waiver and material purpose control; speculative or erroneous court actions do not satisfy the statute’s "any circumstances" requirement
Whether actions outside the trust’s four corners (e.g., Conditional Agreement, mortgage, sale proceeds) make corpus available	External agreements or obligations cannot alter the trust’s written prohibition on invading principal; such actions do not create a payment "from the trust"	Conditional Agreement and practical incidents of ownership (residence, possible mortgage, sale proceeds) show practical routes to benefit Marilyn from corpus	Payments must be "from the trust" under its terms; occupancy or external agreements may create countable income but do not make corpus available

Key Cases Cited

Wos v. E.M.A., 568 U.S. 627 (2013) (observing Medicaid complexity and federal principles)
Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268 (2006) (states’ role and federal constraints in Medicaid program)
Wis. Dep’t of Health & Family Servs. v. Blumer, 534 U.S. 473 (2002) (eligibility must consider only income/resources available under federal standards)
Daley v. Sec’y of the Exec. Office of Health & Human Servs., 74 N.E.3d 1269 (Mass. 2017) (distinguishing payments from trust income versus corpus for Medicaid countability)
Hegadorn v. Dep’t of Human Servs. Dir., 931 N.W.2d 571 (Mich. 2019) ("any circumstances" can include hypothetical scenarios but payments must come from the trust)
Guilfoil v. Sec’y of the Exec. Office of Health & Human Servs., 162 N.E.3d 627 (Mass. 2021) (apply state trust law/four‑corners to determine availability)
Lane v. Caler, 299 P.3d 827 (Mont. 2013) (trust ownership of residence and income implications)
Collins v. Norwest Inv. Mgmt. & Tr. (In re Estate of Berthot), 59 P.3d 1080 (Mont. 2002) (settlor intent governs trust interpretation)