Pohlmann v. Nebraska Department Of Health And Human Services

710 N.W.2d 639 (2006)

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Nature of the Case

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Facts

Herman executed his last will and testament, which provided for the creation of two separate trusts following his death. A marital trust was to be established using the residue of any property that Herman owned at death and that he did not otherwise dispose of in the rest of his will. P was to receive all of the net income from this trust and was entitled to disbursement of all or a part of the principal upon her written request or, should she become incapacitated, at her trustee's discretion, for her health, education, support, or maintenance. The second Family Trust was to be funded with an amount of Herman's property, real or personal, 'equal to the unified credit (allowable in determining the federal estate tax payable by reason of [Herman's] death, i.e. unified credit $62,800 equals $225,000 tax-exempt property).' The will directed that P was to receive from the Family Trust 'all of the accumulative income from the individual funds and such portion of the principal as [the trustee] may, from time to time, deem appropriate for her health, education, support or maintenance.' If P was to remarry she could only get income and not the principal from the Family Trust. The will appointed P as personal representative of his estate or, alternatively, their two children Merlyn Pohlmann and Verona Lee Gumaer as copersonal representatives. Following Herman's death, the copersonal representatives executed two deeds of distribution conveying four parcels of real property to the trustee of the Family Trust. The marital trust was never funded. Merlyn, as attorney in fact for Ruth, applied to DHHS for Medicaid benefits on P's behalf. P was a resident of a nursing home. P was ineligible because she had available resources exceeding the program standard of $4,000. This was based on the balance in her bank accounts and under the testamentary trust established by Herman's will. Merlyn appealed contending that while the income from the Family Trust was an available resource, but the corpus of the trust was not. The hearing officer affirmed the DHHS decision. Section 1396p(d)(3)(B)(i) (2000) deems that resources of an irrevocable trust are available to an applicant if there are 'any circumstances' under which payment could be made for the benefit of the applicant. The district court affirmed. Under the any circumstances test, P 'could receive payments from the irrevocable Family Trust to pay for her medical expenses.' P appealed.