Court Denies Father’s Fraud-Based Claim to Recover Assets Gifted to Children for Medicaid Planning Purposes
Father claims his children converted his assets and fraudulently misrepresented their intention to establish a living trust for his benefit so that he could qualify for Medicaid benefits; however, statute of limitations bars a lawsuit by father.
Rozzano v. Preston (Wash. Ct. App., Div. 1, No. 64371-1-I, April 4, 2011) (unpublished).
Facts. In 1994, Frank Rozzano met with his attorney to discuss potential strategies for Medicaid planning and long-term care. The attorney suggested a plan in which Mr. Rozzano would gift his assets to his children, who would then use the assets to fund a living trust for their father’s benefit. By removing these assets from his estate, Mr. Rozzano would become eligible for Medicaid and other needs-based benefits after the expiration of the applicable look-back period. In 1996, Mr. Rozzano made the gifts to his children; however, Mr. Rozzano was warned that, upon transferring the assets to his children, he would no longer retain any control over the gifted assets.
The children never created the living trust, but they did provide financial support to their father, including purchasing his residence, and paying for various travel expenses, dental appointments and his wedding to his new wife. On certain occasions throughout the years, the children denied requests for money from their father.
Mr. Rozzano had a stroke in 2005, and thereafter had some memory loss regarding the previous transfer of assets to his children for the purpose of creating the living trust. Following the stroke, the children frequently denied their father’s requests for funds, including refusing to fund his regular fishing trips. In response to these actions, Mr. Rozzano hired a different attorney to complete a Termination and Revocation of the assignment of interest (i.e., the gift) previously executed in 1996. The children were provided notice of the Revocation, with a demand for the return of the assets, including an accounting of all expenditures.
In July of 2008, Mr. Rozzano filed a lawsuit against his children alleging claims of fraud and misrepresentation, undue influence, conversion and breach of trust and fiduciary duty. The children filed a motion for summary judgment, which was granted by the trial court since all of the claims were barred by the three-year statute of limitations. Mr. Rozzano appealed.
Court’s Decision. The Court of Appeals of Washington affirmed the trial court’s decision. The Court of Appeals determined that, since Mr. Rozzano had actual knowledge that the trust was not established and the children were exercising their control over the funds more than three years before he filed suit, all of his claims were barred by the statute of limitations.