Court Rejects Claim That Transfer Reserving Life Estate Simply Corrected Earlier Deed

A Medicaid applicant was determined to have made an uncompensated transfer, thereby resulting in an imposed penalty period, after he recorded a deed transferring his residence to his children and reserving a life estate for himself.

 

Fimon v. Commissioner of Minnesota Department of Human Services (Minn. App. Ct., No. A11–561, Oct. 24, 2011).

Facts: In May of 2003, Mr. Rodney Fimon executed a deed that transferred the ownership of his residence to his two sons and himself as joint tenants.  By owning the property jointly with both of his sons, Mr. Fimon maintained an ownership interest in the residence.  Over six years later, in July of 2009, Mr. Fimon prepared a subsequent deed, this time transferring his remaining interest in the residence to his two sons and reserving a life estate for himself.  He claimed that the 2009 deed was prepared in order to correct the 2003 deed; however, a life estate ownership (as opposed to the former joint tenancy ownership) is considered an exempt asset for the purposes of Medicaid eligibility.  Several months later, Mr. Fimon applied for Medicaid benefits, and he was denied.  The state of Minnesota determined that the transfer of the residence formerly owned as a joint tenant, without compensation from his sons, was an uncompensated transfer, and therefore the state imposed a penalty period on Mr. Fimon.

Mr. Fimon appealed this decision, arguing that the 2009 deed was prepared in order to correct the 2003 deed.  The state denied the appeal, and the trial court affirmed the state’s decision. Mr. Fimon then appealed to the Minnesota Court of Appeals.

Court’s Decision: The Minnesota Court of Appeals affirmed the decision of the trial court, determining that the evidence presented supported the notion that Mr. Fimon transferred his joint tenancy interest to his sons for less than fair market value, and retained a life estate interest because such ownership is an exempt asset for the determination of Medicaid benefits.  Since there was no viable evidence that the initial 2003 deed was intended to reserve a life estate for Mr. Fimon, the subsequent deed had the effect of changing his interest in the property, rather than simply correcting a clerical error.  This penalty period may have been avoided if Mr. Fimon had consulted an elder law attorney and properly planned for his Medicaid eligibility prior to applying for benefits.