Estate planning is much more than dividing your belongings and assets after death. Estate planning can include the strategic use of property law to maximize assets for medical care. A recent appellate decision (16-P-282) discusses which type of control a grantor can maintain after executing a deed through a special power of appointment. The grantor in this action decided to protect her home from a lien provision found in the Massachusetts Medicaid program, MassHealth. To do so, she transferred property to her three daughters and son-in-law in equal shares, retaining a life estate. Following this transfer, she decided to remove one of the daughters’ share, redistributing the difference to the others.
When the grantor passed, the executrix presented the will for probate. The excluded daughter objected to the probate and sought a declaratory judgment voiding the reapportionment made through the grantor’s reserved power of appointment. The matter went to trial, at which the court found the reservation of appointment to be valid. The daughter appealed, arguing that the deed was misinterpreted.
In its analysis, the appellate court recognized the tension between two objectives in this document. Both parties agreed that the grantor intended to divest the property, keeping a life estate for herself, to minimize the impact of the MassHealth look-back regulations. They also agreed that she intended to keep the ability to alter the conveyance before her death. The deed reflected this intent. The first grants a present ownership interest, but the second allows the grantor to wipe out those interests. The daughter challenging the deed argued that even though the grantor intended to retain her interest, that reservation of power in the deed was void under the law.