Purchase Agreement Not Countable Resource for Medicaid
This report on the NC case of Estate of Wilson is from the National Academy of Elder Law Attorneys (NAELA)’s eNewsletter:
Kenneth Wilson was hospitalized from January 7, 2007 through the date of his death on February 22, 2007. While he was hospitalized, his community spouse, Doris, sold her 100% stock ownership in Brothers Deliver Service to her son pursuant to a purchase agreement. The agreement provided for a total payment of $62,531, to be paid in 60 installments of $1041.82. Doris then applied for Medicaid on April 5, 2007. Benefits were denied after the Department determined that the purchase agreement was a countable promissory note. A fair hearing followed affirming that decision. The trial court reviewing the administrative appeal determined that the agreement was not a promissory note, but determined that it was countable as “chattel” since it involved the sale of stock. On appeal, the Court of Appeals reversed, finding that the agreement was not a countable resource. In analyzing the administrative code, the Court found three forms of property defined: real, personal and liquid. The agreement did not fall within the Medicaid Manual’s definitions of real or personal property. Therefore, to be considered countable, it must fall within the manual’s definition of “liquid assets.” Initially, the court of appeals agreed with the trial court that the agreement was not a negotiable promissory note. Its payment terms were too uncertain to constitute an unconditional promise to pay. The court then found that the agreement was not chattel paper; to be classified as such it must be a monetary obligation and thus be capable of being monetarily valued. In this case, the payment terms were too uncertain to determine what value should be given and when payments would begin. Although the court held the agreement was not countable because it did not squarely fit within the terms of a poorly worded manual, the decision appeared to be influenced by its finding that the stock would have been exempt if Doris had simply left it in her name; under North Carolina’s rules, the asset would have been exempt as property actively used in a trade or business.
Estate of Wilson, 2009 N.C. App. LEXIS 1737, Appeal No. COA09-216 (November 3, 2009)
