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Purchase of Life Estate Does Not Gain Medicaid Eligibility

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MARCH 3, 2003 VOLUME 10, NUMBER 35

Stella Thompson was living alone in Virginia when she developed a serious leg infection requiring that she be admitted to a nursing home. Her sister Josephine Greene moved her to Florida, into a nursing home near Ms. Greene’s home, and applied for Medicaid assistance with the cost of the nursing home. As part of that move, Ms. Greene sold an interest in her own home to her sister.

Medicaid, of course, provides medical care for the disabled and elderly poor. If Ms. Thompson’s available resources exceeded $2,000 she would not qualify for nursing home assistance from the Florida version of the Medicaid program. Ms. Thompson had over $20,000 in cash reserves, and so she was ineligible upon her arrival in Florida and admission to the facility.

On behalf of her sister Ms. Greene could have simply paid for nursing home care until the remaining $20,000 was reduced to $2,000, and then applied for Medicaid eligibility. She chose instead to buy her sister a home. More precisely, she decided to sell her sister a life estate in her own condominium.

A “life estate” gives the owner the right to occupy, rent out or otherwise control a property for life. On the death of the life estate holder, however, the property automatically becomes the property of the person named as the holder of the “remainder” interest. In Ms. Thompson’s case, Ms. Greene used a power of attorney to buy a life estate in Ms. Greene’s condominium for Ms. Thompson—giving her the right to live there, and even to charge Ms. Greene rent to stay in what had been her condominium.

Why would Ms. Greene take such a step? Because Medicaid recipients are permitted to retain their homes, Ms. Greene reasoned that Ms. Thompson could qualify for Medicaid without having to dispose of her new interest in the condominium, and that Ms. Greene would be permitted to keep the $18,500 purchase price.

The Florida Medicaid agency did not agree. The hearing officer considering Ms. Thompson’s application discredited the appraiser hired by Ms. Greene to value her sister’s life estate, and continued to treat the $18,500.00 as an available resource. Ms. Thompson appealed to the Florida Court of Appeals.

The appellate court agreed with the Medicaid agency. Even though no evidence was introduced by the agency, said the judges, the transaction “was a sham to gain eligibility … in the absence of any competent evidence to support a reasonable purpose and a market value for the transfer.” Thompson v. Dep’t. of Children and Families, January 24, 2003.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.