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.
When reviewing a deed or will, the court’s primary objective is upholding the grantor’s intent. However, if the conditions within the document are “repugnant to the terms of the grant,” and the fulfillment of either condition would result in the breach of the other, one must yield. Case law also dictates that if a grant is followed by a term that would restrain what is expressly granted, the subsequent term is void. Courts strongly prefer to leave all provisions intact, so if provisions can stand together under the the rules of law, they will be construed as such. The appellate court in this case determined that the deed’s conditions were not repugnant to each other. By retaining a life estate interest, the remaining interests were not wholly given, known in property law as fee simple absolute. Since both remainder interests were defined by limitation, the court concluded that the first condition was congruent with the second condition reserving the power of appointment. The deed’s amended conveyance to the other siblings and son-in-law was upheld.
This case gives insight into the deference probate courts give to the intent of the grantor in a will or deed. Managing health care costs while living off a limited sum does not mean you must give up all of your possessions. This case shows that you can plan for the future, stay in your home, and keep control over the beneficiaries of your estate. The important take away from this lawsuit is the need for carefully constructed documents written by experienced professionals. The Massachusetts estate planning attorneys at Karsner & Meehan are here to help you with all of your estate planning needs. Our office understands and respects the complicated considerations that are present when making these decisions. The lawyers of Karsner & Meehan can guide you through the options available under the law and work tirelessly to provide you with a satisfactory plan. For a free, confidential consultation, call 508.822.6600.
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