Danny Moran created a trust for the benefit of his mother, Joan. The trust named Danny and his brother, William, as Co-Trustees in charge of the trust and as remainder beneficiaries (meaning they would inherit the remainder of the trust at its termination). The Co-Trustees, at their discretion, could distribute income and principal to maintain Joan's standard of living as long as Joan resided anywhere other than a "skilled nursing facility, nursing home, or other residential care facility" or until her death, whichever occurred first.
In 2010, Joan moved to a private adult home. Sadly, Joan fell and needed rehabilitation so she was admitted to a skilled nursing facility. She was discharged after several months. Thereafter, William petitioned for a declaration that the trust terminated upon Joan's admission to the adult home or to the skilled nursing facility. He also demanded an accounting of the trust assets, that Danny be removed as Co-Trustee, and a distribution of the remaining trust assets.
Danny and William both filed for partial summary judgment. The Court granted Danny's motion and dismissed the petition to terminate the trust. William appealed and the Appellate Court affirmed.
The Court held that the private adult home where Joan resided did not qualify as a skilled nursing facility, nursing home, or other residential care facility, meaning it did not trigger the trust's termination provision. It also held that Joan's short-term admission to the skilled nursing facility for rehabilitation did not trigger the termination clause because she was never formally admitted as a permanent or chronic care patient. Therefore, the trust continued for Joan's benefit.
Trusts can be an important part of your estate planning, especially if you want to protect assets for someone. Special Needs Trusts can be used to preserve assets for someone (like a disabled child or a nursing home resident) so that they do not disrupt government benefits. If you would like to discuss estate planning that fits your needs, schedule an appointment with one of our attorneys.
Source: Matter of Moran, 2018 WL 5830984 (N.Y. App. Div. Third Dept. Nov. 8, 2018)