In a case argued by elder law attorney William J. Browning, an Ohio appeals court upholds the state’s decision to count the assets in a fully discretionary supplemental needs trust against a Medicaid recipient because the trust contains language allowing the trustee to use funds for the beneficiary’s health or welfare and the beneficiary did not obtain a declaratory judgment stating that the trust is an exempt resource.  Cook v. Ohio Department of Job & Family Services (Ohio. Ct. App.,10th, Nos. 14AP-852, 14AP-853, Nov. 19, 2015).

Virginia Cook was the beneficiary of a supplemental needs trust set up by her mother in 2000.  Between 2004 and 2011, Ms. Cook received Medicaid benefits from the Ohio Department of Job and Family Services (DJFS), but upon review of the trust, DJFS terminated Ms. Cook’s benefits in 2013.  The state claimed that the trust was not an exempt resource because it contained language allowing the trustee to use trust funds for Ms. Cook’s health or welfare and it did not fall within several exceptions.

Ms. Cook appealed, arguing that since the trust was wholly discretionary, it could not be a countable resource and was specifically exempted under state and federal law.  In support of this argument, Ms. Cook pointed to a decision by the Ohio Supreme Court in 2008 (Pack v. Osborn, 117 Ohio St.3d 14, 2008-Ohio-90) that allowed a trustee to obtain a declaratory judgment clarifying that a trust was completely discretionary for purposes of qualifying for Medicaid benefits.  She also argued that the doctrine of equitable estoppel should prevent the state from disapproving a trust it had reviewed and approved in 2004.

The Ohio Court of Appeals, Tenth District, upholds the state’s decision.  The court finds that the trust does not fall within any allowable exceptions and that it is not exempted by law.  The court states that “the proper method for determining whether a trust is a wholly discretionary trust . . . for purposes of a Medicaid eligibility determination is through a declaratory judgment action.  Such an interpretation could then be used in the Medicaid eligibility review process to determine whether the trust qualifies under the exceptions listed [in the statute].”  The court also rejects the equitable estoppel argument because the Ohio Supreme Court has not allowed the doctrine to be used against political subdivisions engaged in governmental functions.

To read the court’s decision, go to:  http://www.supremecourt.ohio.gov/rod/docs/pdf/10/2015/2015-Ohio-4966.pdf