Skip to content

Do the Lawyers Representing the Office of Medicaid in Massachusetts Know What a Revocable Trust Is?

April 8, 2015

At Massachusetts fair hearings, the Office of Medicaid often routinely makes the claim that irrevocable trusts are revocable or arguably revocable in various situations that have nothing to do with revocability, as if the word “revocable” were meaningless. In past fair hearings, the Office of Medicaid has issued that label without further explanation when the trustee can make distributions to terminate the trust to persons other than the settlor or the settlor’s spouse. In one case, the Office of Medicaid has made the claim that if a trust protector (who was not the settlor of the trust) could make administrative amendments to the trust, it was then revocable.

The Office of Medicaid recently made the stunningly inventive claim that if the Trustee had the power to make distributions to the settlor’s children but none of them were alive, the trustee could then make the terminating distributions to the settlor. The fact that there was nothing in the trust that said so did not seem to matter to the lawyer at the Office of Medicaid. (See Fair Hearing Decision 1401521, page 9, footnote 1, where the hearing officer, Sara E. McGrath, rejected that claim: “I am not persuaded by the MassHealth argument that if the appellant has no children, the trustees’ discretionary power to distribute principal during appellant’s lifetime to her then living children somehow gives the trustees the power to distribute principal to the appellant.”

Unfortunately, nothing is ever presented by the Office of Medicaid to support its revocability arguments. It is hard to believe that the Office of Medicaid has not found that the definition of the term “revocable trust” can be found in the State Medicaid Manual, section 3259.1 A.5., which states: “Revocable Trust.– A revocable trust is a trust which can under State law be revoked by the grantor.” The definition of the word “revocable” can also be found in M.G.L. c. 203E, Section 103 as “a trust that is revocable by the settlor without the consent of the trustee or a person holding an adverse interest,” and the definition of the word “settlor” can be found there as “a person … who creates or contributes property to a trust.” M.G.L. c. 203E, Section 112(1) states that a “revocable trust” is a trust that is “revocable by the settlor until the time of the settlor’s death.”

Despite all of these definitions, on January 1, 2014, the Office of Medicaid put this definition into its regulations at 130 CMR 515.001: “Revocable Trust – a trust whose terms allow the grantor to take action to regain any of the property or funds in the trust.” Thus, the Office of Medicaid has apparently manipulated its regulations so that lawyers at the Office of Medicaid would have some degree of ethical protection that would allow them to make claims about irrevocable trusts being revocable or arguable revocable.

The Office of Medicaid is not entitled to make up new definitions of common words and phrases. “See Comey v. Hill, 387 Mass. 11, 15 (1982), quoting 2A Sands, Sutherland Statutory Construction s. 50.03, at 277-278 (4th ed. 1973) (“Words and phrases having well-defined meanings in the common law are interpreted to have the same meanings when used in statutes dealing with the same or similar subject matter as that with which they were associated at common law”).” Cohen v. Comm’r of Div. of Med. Assistance, 423 Mass. 399, 413-414 (1996).

The choice of the lawyers at the Office of Medicaid to attempt to claim that irrevocable trusts are revocable shows the extreme lengths to which they will now go to try to attack all trusts through the fair hearing process. If the Office of Medicaid is truly unaware of the obvious difference between a power of revocation held by a settlor and a termination power held by a trustee or a limited power of amendment held by a trust protector, then all of its other statements of law, as well as its claims for judicial deference, are necessarily called into question.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: