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The Position of the Office of Medicaid in the Doherty Case Was that a Trust Must Be Read as a Whole, and that the Trustee’s Fiduciary Duties Are an Important Consideration

May 18, 2014

It has been a fundamental tenet of trust interpretation in Massachusetts for generations that the intention of the Settlor is to be respected, that the trust is to be read as a whole, and that any ambiguous or conflicting provisions are to be interpreted in a harmonious manner. In most MassHealth trust denials, there is no reasonable way of interpreting the irrevocable trust as providing for principal distributions to or for the benefit of the Settlor, yet the biased, unfair and unbalanced memorandum of the Office of Medicaid usually attempts to get away with placing a phrase from the irrevocable trust out of context. The memorandum introduced by the Office of Medicaid usually does not even make an honest attempt to get the law correct, even though the new legal position adopted by the Office of Medicaid stands in stark contrast to its official position when it was attacking the trust in the Doherty case.

The correct legal position about trust interpretation was stated on page 12 in the September 28, 2007 brief entitled “Defendant’s Opposition to Plaintiff’s Motion for Judgment on the Pleadings” filed in Essex Superior Court by Carolann Mitchell, Assistant General Counsel of the Executive Office of Health and Human Services in the Doherty case: “In reviewing contracts, the courts have found that a contract must be read in such a way that no part of the agreement is left meaningless. See Starr v. Fordham, 420 Mass. 178, 190 (1995); see also S.D. Shaw & Sons, Inc. v. Joseph Rugo, Inc., 343 Mass. 635, 640 (1962). In other words, contracts must be construed to give “reasonable effect” to each provision contained therein. See State Line Snacks Corp. v. Town of Wilbraham, 28 Mass. App. Ct. 717 (1990). …To allow the one sentence … to control the whole of this document would render the Settlor’s stated intent … completely meaningless. Such an interpretation of this trust is … against the weight of the law.”

On that same page in the brief, the position of the Office of Medicaid recognized the importance of fiduciary duties in trust analysis. The Office of Medicaid took the position that the Trustee in that case had fiduciary duties, but not to the remainderpersons, but rather to the Settlor: “The unambiguous language of Article II demonstrates the Trustees’ fiduciary duty runs to Muriel, and dictates that they can use all assets of the Irrevocable Trust for her care and benefit.” The opposite is usually true in most MassHealth trust denials, where the Trustee has fiduciary duties to the remainderpersons, and cannot distribute principal to or for the benefit of the Settlor without violating those duties.

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