Donna G. v. Nebraska Dept. of Health & Human Servs. , 301 Neb. 838 ( 2018 )


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    Nebraska Supreme Court A dvance Sheets
    301 Nebraska R eports
    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
    Cite as 
    301 Neb. 838
    Donna G.,                                Eric S.,
    as mother and next friend of
    a minor child, appellant, v. Nebraska Department
    of H ealth and Human Services and Calder A.
    Lynch, director, Division of Medicaid and
    Long-Term Care, appellees.
    ___ N.W.2d ___
    Filed December 14, 2018.   No. S-17-712.
    1.	 Administrative Law: Judgments: Appeal and Error. A judgment or
    final order rendered by a district court in a judicial review pursuant to
    the Administrative Procedure Act may be reversed, vacated, or modified
    for errors appearing on the record.
    2.	 ____: ____: ____. When reviewing an order of a district court under
    the Administrative Procedure Act for errors appearing on the record, the
    inquiry is whether the decision conforms to the law, is supported by com-
    petent evidence, and is neither arbitrary, capricious, nor unreasonable.
    3.	 Judgments: Appeal and Error. Whether a decision conforms to law
    is by definition a question of law, in connection with which an appel-
    late court reaches a conclusion independent of that reached by the
    lower court.
    4.	 Trusts: Intent. Whether a testamentary trust amended by a probate
    court order pursuant to Neb. Rev. Stat. §§ 30-24,123 and 30-24,124
    (Reissue 2016) remains a testamentary trust is a question of law.
    5.	 Trusts: Medical Assistance: Intent. When a testamentary trust is modi-
    fied by a court-approved compromise agreement, the question whether it
    retains its testamentary character for purposes of determining a benefi-
    ciary’s Medicaid eligibility will depend on both the nature of the parties’
    agreement and the court’s order approving it.
    6.	 ____: ____: ____. When analyzing the terms of a testamentary trust to
    determine if the trust corpus is “available” for purposes of Medicaid
    eligibility, courts look to whether the trust is a support trust or a discre-
    tionary trust.
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
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    7.	 Trusts: Medical Assistance. When a testamentary support trust allows
    a beneficiary to compel distributions of income, principal, or both, for
    expenses necessary for the beneficiary’s support, the trust may be con-
    sidered as an available asset when evaluating Medicaid eligibility.
    8.	 ____: ____. When a testamentary trust grants the trustee uncontrolled
    discretion over payments to the beneficiary, it is considered a discretion-
    ary trust for purposes of Medicaid eligibility. Because the beneficiary
    of a discretionary trust does not have the ability to compel distributions
    from the trust, only those distributions of income, principal, or both
    actually made by the trustee may be considered as available assets when
    evaluating Medicaid eligibility.
    Appeal from the District Court for Lancaster County:
    A ndrew R. Jacobsen, Judge. Reversed and remanded with
    directions.
    Randy Fair, of Dudden & Fair, P.C., L.L.O., for appellant.
    Douglas J. Peterson, Attorney General, and Ryan C. Gilbride
    for appellees.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
    Papik, and Freudenberg JJ.
    Stacy, J.
    The Nebraska Department of Health and Human Services
    (DHHS) terminated the Medicaid benefits of Eric S., and the
    district court affirmed. Eric’s court-appointed guardian and
    conservator appeals. The primary issue on appeal is whether
    the corpus of a trust is available to Eric for purposes of deter-
    mining his Medicaid eligibility. For the reasons set forth below,
    we reverse, and remand with directions.
    I. BACKGROUND
    Eric is a young man with cerebral palsy. Before July 1,
    2016, he was receiving “Aid to the Aged, Blind or Disabled”
    Medicaid waiver services.1 The date Eric began receiving such
    services is not clear from the record.
    1
    See Neb. Rev. Stat. §§ 68-1002 to 68-1005 (Reissue 2009).
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
    Cite as 
    301 Neb. 838
    In 2012, Eric’s grandmother, Lois Branting, executed her last
    will and testament. Branting’s will devised all of her property,
    in equal shares, to her grandchildren living at the time of her
    death. The will further provided that “should any of my grand-
    children be under the age of thirty (30) years at the date of my
    death, then all of my property shall instead be distributed to
    my Trustee to be held pursuant to the provisions of paragraph
    5 below.” Paragraph 5 of the will was titled “Grandchildren’s
    Trust” and provided in pertinent part:
    5.1 My trustee shall hold all property devised to my
    trustee for the benefit of my grandchildren who shall sur-
    vive me and of the then living issue of any of my grand-
    children who shall not survive me, upon the following
    terms and conditions:
    5.2 During the term of this trust, my trustee shall apply
    such part of the net income and principal of this trust as
    shall from time to time be necessary or appropriate to the
    support, care, maintenance, medical expense, educational
    expense and general welfare of my trust beneficiaries in
    such amounts and proportions as my trustee, in the sole
    and uncontrolled discretion of my trustee, shall deem
    advisable, and shall accumulate and add to principal any
    net income not used for such purposes.
    5.3 At such time as my youngest living grandchild
    shall reach the age of thirty (30) years, this trust shall
    terminate and all principal and accumulated income, after
    the payment of closing expenses, shall be distributed in
    equal shares, to my then living grandchildren and the then
    living issue of any grandchild of mine who shall then be
    deceased, so that there shall be one such equal share for
    each living grandchild of mine and one such equal share
    for the then living issue of any grandchild of mine who
    shall then be deceased to be shared by said issue by right
    of representation.
    When Branting died on November 29, 2014, she was survived
    by four grandchildren, all of whom were minors.
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
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    301 Neb. 838
    In December 2015, the parents of Branting’s grandchildren
    entered into a written agreement with Branting’s personal rep-
    resentative to split the Grandchildren’s Trust into two separate
    trusts: one solely for the benefit of Eric (Eric’s Trust), and
    another for the benefit of the remaining three grandchildren.
    That agreement recited in part:
    [T]he four grandchildren . . . who are the beneficiaries
    of the . . . Grandchildren’s Trust . . . are in very different
    situations and will have very different needs in the future.
    [The parents] have further determined that it would be
    best for the grandchildren . . . if the [Grandchildren’s
    Trust] was separated into one Trust for the benefit of
    [Eric] and another separate Trust for the benefit of [the
    other three grandchildren]. Specifically, [Eric] would be
    best benefitted if his separate Trust had special needs pro-
    visions which would enable for him to receive property
    from the [Branting Estate] without significantly reducing
    the benefits which he receives from various government
    agencies as a result of his physical and mental disabili-
    ties. They have further determined that it would be best
    for the beneficiaries of the two new Trusts if the Trust
    for the Benefit of [Eric] were to receive the 25% of the
    Estate to which he is entitled in cash to the fullest extent
    possible, and the Trust for [the other three grandchildren]
    would receive the Real Estate still owned by the Estate
    which includes the residence in which they have been and
    will be raised together with any remaining assets together
    totaling 75% of whatever assets remain in the Estate on
    the date of distribution.
    Beyond referencing “special needs provisions” for Eric, the
    agreement did not include additional trust terms for the split
    trusts, but merely recited the pertinent provisions of Branting’s
    will, including the sections establishing and setting out the
    terms of the Grandchildren’s Trust.
    After the agreement was reached, Branting’s personal rep-
    resentative petitioned the probate court, pursuant to Neb. Rev.
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
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    Stat. § 30-24,124 (Reissue 2016), to approve the agreement
    and split the Grandchildren’s Trust. The probate court did so in
    an order entered December 28, 2015, which provided:
    Pursuant to the provisions of Neb. Rev. Stat. §30-24, 124
    the Court finds that the effect of the provisions of the
    Agreement upon the interests of the interested persons is
    just and reasonable and therefore the Agreement is . . .
    approved, and the Petitioner as Personal Representative of
    the Estate shall make all further disposition of the Estate
    in accordance with the terms of the Agreement.
    After the probate court’s order was entered, the separate trusts
    were funded in accordance with the agreement and separate
    trustees were appointed for the two trusts. The probate court’s
    order was not appealed, and no party to the instant appeal has
    questioned the provisions of the probate order or the procedure
    followed in the probate court.
    The balance of Eric’s Trust was $512,380.39 as of May 16,
    2016. DHHS regulations establish that the maximum available
    resources one may own and still be considered eligible for
    Medicaid is $4,000.2 Eric’s mother, Donna G., serves as his
    court-appointed guardian and conservator.
    In April 2016, Donna informed DHHS that Eric had what
    she referred to as a “Special Needs Trust.” One month later,
    DHHS determined that the entire corpus of Eric’s Trust was
    an available resource for purposes of determining his Medicaid
    eligibility. In June, DHHS mailed a notice of action advising
    that Eric’s Medicaid coverage and Medicaid waiver services
    would end effective July 1, 2016, because he was ineligible for
    Medicaid due to excess resources.
    In response to the notice of action, Donna requested and
    was given an administrative hearing, after which DHHS
    affirmed its decision terminating benefits. Donna timely
    filed a petition for judicial review in the Lancaster County
    2
    See 477 Neb. Admin. Code, ch. 21, § 001.17 (2014).
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
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    District Court, challenging DHHS’ decision pursuant to the
    Administrative Procedure Act.3
    The district court affirmed DHHS’ decision to terminate
    benefits, finding that the entire corpus of Eric’s Trust was an
    available resource for purposes of determining his Medicaid
    eligibility. The court first considered the nature of Eric’s Trust.
    The court concluded it was not a testamentary trust, reasoning
    it was the product of action taken in the probate court. And it
    concluded Eric’s Trust was not a special needs trust, because it
    lacked the necessary special needs provisions. Thus, by proc­
    ess of elimination, the court found Eric’s Trust was properly
    characterized as an “irrevocable trust created after August
    11, 1993.”4
    The court next considered the DHHS regulation governing
    treatment of such a trust, which provides:
    If there are any circumstances under which payment from
    the trust corpus could be made to or for the benefit of the
    client . . . the portion of the corpus from which payment
    to or for the benefit of the client . . . could be made must
    be considered a resource available to the client.5
    Applying this standard, the district court found there were cir-
    cumstances under which the trust corpus could be paid to Eric,
    and thus concluded the corpus was an available resource for
    purposes of determining his Medicaid eligibility.6
    Alternatively, the district court reasoned that even if Eric’s
    Trust was a testamentary trust, it would still be considered an
    available resource for purposes of determining his Medicaid
    eligibility.7 The court noted the language of Eric’s Trust had
    elements of both a support trust and a discretionary trust, and
    concluded it was the type of hybrid “‘discretionary support
    3
    Neb. Rev. Stat. §§ 84-901 to 84-920 (Reissue 2014).
    4
    See 477 Neb. Admin. Code, ch. 21, § 001.15A13b (2014).
    5
    § 001.15A13b(1)2.
    6
    See § 001.15A13b(1) and (2).
    7
    See 477 Neb. Admin. Code, ch. 21, § 001.15A12 (2014).
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    trust’” this court discussed in Smith v. Smith.8 In Smith, we
    held that “the trustee of a discretionary support trust can be
    compelled to carry out the purposes of the trust in good faith.” 9
    Applying this principle, the court reasoned that if Eric could
    compel his trustee to carry out the purpose of Eric’s Trust in
    good faith, he could also compel the trustee to make distribu-
    tions from it for his medical expenses. Thus, the court con-
    cluded that even if Eric’s Trust was considered testamentary,
    the entire corpus was still an available resource for purposes of
    determining his Medicaid eligibility.
    Donna timely appealed the district court’s judgment, and we
    moved the case to our docket on our own motion.10
    II. ASSIGNMENTS OF ERROR
    Donna assigns, restated, that the district court erred when it
    included Eric’s Trust as an available resource for purposes of
    determining his Medicaid eligibility, because (1) the trust is
    testamentary and (2) the trust is discretionary.
    III. STANDARD OF REVIEW
    [1] A judgment or final order rendered by a district court in
    a judicial review pursuant to the Administrative Procedure Act
    may be reversed, vacated, or modified for errors appearing on
    the record.11
    [2] When reviewing an order of a district court under
    the Administrative Procedure Act for errors appearing on the
    record, the inquiry is whether the decision conforms to the law,
    is supported by competent evidence, and is neither arbitrary,
    capricious, nor unreasonable.12
    8
    Smith v. Smith, 
    246 Neb. 193
    , 
    517 N.W.2d 394
    (1994).
    9
    
    Id. at 198,
    517 N.W.2d at 398.
    10
    Neb. Rev. Stat. § 24-1106 (Supp. 2017).
    11
    § 84-918; J.S. v. Grand Island Public Schools, 
    297 Neb. 347
    , 
    899 N.W.2d 893
    (2017).
    12
    J.S., supra note 11.
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    DONNA G. v. NEBRASKA DEPT. OF HEALTH & HUMAN SERVS.
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    [3] Whether a decision conforms to law is by definition
    a question of law, in connection with which an appellate
    court reaches a conclusion independent of that reached by the
    lower court.13
    IV. ANALYSIS
    We begin with an overview of the regulatory framework
    that governs our analysis. Medicaid is a joint federal and state
    funding program that provides medical care for individuals
    whose resources are insufficient to meet the cost of neces-
    sary medical care.14 The program provides federal financial
    assistance to states that choose to reimburse certain costs of
    medical treatment for needy persons.15 A state is not obligated
    to participate in the Medicaid program; however, once a state
    has elected to participate, it must comply with standards and
    requirements imposed by federal statutes and regulations.16
    Nebraska adopted the federal Medicaid scheme in the
    Medical Assistance Act.17 Eligibility for Medicaid is set out in
    § 68-915, and it includes persons who qualify for assistance
    under Nebraska’s program for assistance to the aged, blind,
    or disabled.18
    DHHS is tasked with administering Nebraska’s Medicaid
    program for the aged, blind, or disabled,19 and has been
    given the authority to promulgate regulations for the pro-
    gram.20 DHHS regulations establish $4,000 as the maximum
    13
    Pohlmann v. Nebraska Dept. of Health & Human Servs., 
    271 Neb. 272
    ,
    
    710 N.W.2d 639
    (2006).
    14
    In re Estate of Vollmann, 
    296 Neb. 659
    , 
    896 N.W.2d 576
    (2017).
    15
    
    Id. 16 Id.
    17
    See Neb. Rev. Stat. §§ 68-901 to 68-991 (Reissue 2009, Cum. Supp. 2016
    & Supp. 2017).
    18
    See §§ 68-915(2) and 68-1002 through 68-1005.
    19
    See § 68-1001.
    20
    See § 68-1001.01.
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    available resources one may own and still be considered eli-
    gible for Medicaid.21 As stated, the balance of Eric’s Trust was
    $512,380.39 in May 2016. Eric’s Medicaid benefits were prop-
    erly terminated only if Eric’s Trust is considered an “available
    resource” for purposes of determining his Medicaid eligibility.
    DHHS regulations define “available resources” as “cash or
    other liquid assets or any type of real or personal property or
    interest in property that the client owns and may convert into
    cash to be used for support and maintenance.”22 Generally
    speaking, DHHS regulations treat trust assets as “[l]iquid
    resources,” which regulations define as “assets that are in cash
    or financial instruments which are convertible to cash.”23
    1. Nature of Eric’s Trust
    When determining which trust assets are “available
    resources” for purposes of Medicaid eligibility, DHHS regu-
    lations treat trust assets differently depending on the nature
    of the trust. Consequently, the nature of Eric’s Trust must be
    determined as a threshold matter.
    As relevant here, DHHS regulations differentiate between
    testamentary trusts,24 revocable trusts,25 and irrevocable trusts
    created after August 11, 1993.26 The parties agree that Eric’s
    Trust is not a revocable trust, so we limit our analysis to
    whether it is properly characterized as either a testamentary
    trust or an irrevocable trust created after August 11, 1993.
    (a) Testamentary Trusts
    A Nebraska statute defines a testamentary trust as “a trust
    created by devising or bequeathing property in trust in a
    21
    See § 001.17.
    22
    477 Neb. Admin. Code, ch. 21, § 001.03 (2014).
    23
    477 Neb. Admin. Code, ch. 21, § 001.15A (2014).
    24
    See § 001.15A12.
    25
    See 477 Neb. Admin. Code, ch. 21, § 001.15A10 (2014).
    26
    See § 001.15A13b.
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    will as such terms are used in the Nebraska Probate Code.”27
    Under DHHS regulations, if a trust is testamentary, it may be
    excluded as a resource “depending on the availability of the
    funds to the individual or his/her spouse as specified in the
    terms of the trust.”28
    (b) Irrevocable Trusts
    DHHS regulations provide that an irrevocable trust is one
    created by an individual “who establishes a trust, who is a
    beneficiary of a trust, and who is an applicant or recipient of
    Medicaid.”29 Individuals are considered to have established
    such a trust if the individual’s assets “were used to form a part
    or the entire corpus of the trust other than by will.”30 Under this
    regulatory definition, irrevocable trusts can be established by
    the individual, his or her spouse, or by “any court or adminis-
    trative body, acting at the direction or upon the request of the
    individual or the individual’s spouse.”31
    If an irrevocable trust is properly classified as one estab-
    lished on or after August 11, 1993, DHHS regulations provide
    the trust corpus will generally be included in the individual’s
    resources for purposes of determining Medicaid eligibility if
    the “any circumstances” test is met.32 That test provides:
    If there are any circumstances under which payment from
    the trust corpus could be made to or for the benefit of the
    client . . . the portion of the corpus from which payment
    to or for the benefit of the client . . . could be made must
    be considered a resource available to the client.33
    27
    Neb. Rev. Stat. § 76-1514 (Reissue 2009).
    28
    § 001.15A12.
    29
    § 001.15A13b.
    30
    
    Id. (emphasis supplied).
    31
    § 001.15A13b4.
    32
    See § 001.15A13b(1) and (2).
    33
    § 001.15A13b(1)2.
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    For the sake of completeness, we note the “any circumstances”
    test does not apply if an irrevocable trust is also either a special
    needs trust or a pooled trust as defined by DHHS regulations,34
    nor does it apply if denial of Medicaid would “cause undue
    hardship.”35 But here, no party contends that Eric’s Trust is
    a special needs or a pooled trust, nor has an undue hardship
    waiver been claimed, so we limit our analysis accordingly.
    (c) Eric’s Trust Is Testamentary
    It is undisputed that the original Grandchildren’s Trust cre-
    ated by Branting’s will was a testamentary trust. The parties
    dispute whether the subsequent agreement to split the testa-
    mentary trust, and the probate court’s approval of that agree-
    ment, changed the fundamental nature of the trust for purposes
    of Medicaid eligibility. DHHS argues that Eric’s Trust was cre-
    ated by the probate court’s using the procedures of Neb. Rev.
    Stat. § 30-24,123 (Reissue 2016) and § 30-24,124, and thus
    became either a self-settled or court-settled irrevocable trust.
    Eric’s guardian and conservator argues the testamentary nature
    of the trust was unchanged by the probate proceedings.
    [4] Whether a testamentary trust amended by a probate court
    order pursuant to §§ 30-24,123 and 30-24,124 remains a testa-
    mentary trust is a question of law.36 When reviewing questions
    of law, an appellate court reaches a conclusion independent of
    the determination reached by the court below.37
    It is true Eric’s Trust would not exist as a separate trust
    without the probate order approving the agreement to split
    the trust, but we are unpersuaded by DHHS’ contention that
    Eric’s Trust lost its testamentary character by virtue of the
    probate court proceedings. We find such a contention difficult
    34
    See § 001.15A13b(1)(a).
    35
    § 001.15A13b(3).
    36
    See In re Trust Created by Hansen, 
    274 Neb. 199
    , 208, 
    739 N.W.2d 170
    ,
    178 (2007) (“the type of trust . . . created is a question of law”).
    37
    See In re Estate of Psota, 
    297 Neb. 570
    , 
    900 N.W.2d 790
    (2017).
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    to reconcile with either the facts of this case or the statutes
    on which the Branting grandchildren and the probate court
    relied to split the original testamentary trust.
    Prior to the Legislature’s adoption of §§ 30-24,123 and
    30-24,124 in 1974, agreements to modify testamentary trusts
    were generally not allowed, pursuant to the common-law rule
    that although a compromise “‘may provide for disbursement
    of the estate of testator in a manner at variance with his will,
    a valid, unexecuted testamentary trust cannot thus be modified
    or destroyed.’”38 The rationale for this rule was that “[w]hen
    an act or agreement of the parties disappoints the purpose of
    the settlor by divesting the property from the purposes named,
    such act or agreement is void ab initio.”39
    The Legislature changed this common-law rule when it
    adopted §§ 30-24,123 and 30-24,124, which expressly allow for
    testamentary trusts to be affected by compromises. Specifically,
    § 30-24,123 states that “[a]n approved compromise is binding
    even though it may affect a trust or an inalienable interest.”
    The intent of the Legislature is expressed by omission as
    well as by inclusion,40 and we see nothing in the statutory
    language indicating that testamentary trusts affected by an
    approved compromise necessarily lose their fundamental char-
    acter. This conclusion is supported by the plain language of
    § 30-24,123, which recognizes that a “compromise does not
    impair the rights of creditors or of taxing authorities who are
    not parties to it.”
    [5] The question here is whether a testamentary trust which
    is modified by a court-approved compromise agreement retains
    its testamentary character for purposes of determining a ben-
    eficiary’s Medicaid eligibility. The answer to that question will
    depend on both the nature of the parties’ agreement and the
    38
    Cahill v. Armatys, 
    185 Neb. 539
    , 544, 
    177 N.W.2d 277
    , 280 (1970),
    quoting In re Estate of Mowinkel, 
    130 Neb. 10
    , 
    263 N.W. 488
    (1935).
    39
    
    Id. 40 E.D.
    v. Bellevue Pub. Sch. Dist., 
    299 Neb. 621
    , 
    909 N.W.2d 652
    (2018).
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    court’s order approving it. But on this record, we conclude that
    neither the agreement to split the trust nor the court’s order
    approving that agreement changed the nature of Eric’s Trust
    from a testamentary trust into a self-settled or court-settled
    irrevocable trust.
    The original Grandchildren’s Trust was created by Branting’s
    will, and even after that trust was split, the essential terms of
    the split trusts were derived from Branting’s will—there is
    no separate trust document. The trust terms in Branting’s will
    were recited verbatim in the agreement to split the testamen-
    tary trust, and when the probate court approved that agree-
    ment, it did not add or eliminate the trust terms. Moreover, the
    entire corpus of Eric’s Trust was funded by Branting’s estate
    pursuant to her will; none of Eric’s assets were used to fund
    the trust.
    Because the Grandchildren’s Trust was established by
    Branting’s will, the administration of Eric’s Trust is still con-
    trolled by the language of that will, and the trust was funded
    exclusively from Branting’s estate pursuant to the terms of her
    will, we conclude as a matter of law that Eric’s Trust retained
    its character as a testamentary trust for purposes of determin-
    ing Medicaid eligibility.41
    2. Eric’s Trust Is Not
    Available Asset
    Having determined that Eric’s Trust is properly character-
    ized as a testamentary trust, we next consider the extent to
    which the trust corpus is “available” to him for purposes
    of determining his Medicaid eligibility. Here, DHHS argues
    the entire corpus of Eric’s Trust is available for purposes of
    41
    Accord Pohlmann, supra note 
    13, 271 Neb. at 278
    , 710 N.W.2d at 644
    (“the plain meaning of the phrase ‘other than by will’ in [42 U.S.C.]
    § 1396p(d)(2)(A) [(2000)] and the corresponding Nebraska regulation
    make it clear that a Medicaid applicant cannot be considered to have
    established a trust for purposes of the restrictions imposed by § 1396p(d)
    if the trust was established by will”).
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    determining his Medicaid eligibility. Under the regulations, an
    asset is “available” if it “may [be] convert[ed] into cash to be
    used for support and maintenance.”42 The central question then
    is whether, given the terms of Eric’s Trust, he can compel the
    trustee to distribute the entire corpus of the trust for his support
    and maintenance.
    [6] This court considered whether the corpus of a trust was
    available to a beneficiary for purposes of Medicaid eligibility
    in Pohlmann v. Nebraska Dept. of Health & Human Servs.43
    In that case, we recognized that when analyzing the terms of
    a testamentary trust to determine if the trust corpus is “avail-
    able” for purposes of Medicaid eligibility, “courts have looked
    to whether the trust is a support trust or a discretionary trust.”44
    We recited the basic difference between “support” trusts and
    “discretionary” trusts:
    “A support trust essentially provides the trustee ‘shall
    pay or apply only so much of the income and principal
    or either as is necessary for the education or support of
    a beneficiary.’ . . . A support trust allows a beneficiary
    to compel distributions of income, principal, or both, for
    expenses necessary for the beneficiary’s support, and [the
    agency administering Medicaid] may consider the support
    trust as an available asset when evaluating eligibility for
    assistance. . . .
    “Conversely, a discretionary trust grants the trustee
    ‘uncontrolled discretion over payment to the beneficiary’
    and may reference the ‘general welfare’ of the benefi-
    ciary. . . . Because the beneficiary of a discretionary trust
    does not have the ability to compel distributions from
    the trust, only those distributions of income, principal, or
    both, actually made by the trustee may be considered by
    42
    § 001.03.
    43
    Pohlmann, supra note 13.
    44
    
    Id. at 279,
    710 N.W.2d at 645.
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    [the agency administering Medicaid] as available assets
    when evaluating eligibility for assistance.”45
    The trust in Pohlmann provided the trustee was to pay “‘all
    of the accumulative income from the individual funds and such
    portion of the principal as it may, from time to time, deem
    appropriate for [the beneficiary’s] health, education, support
    or maintenance.’”46 Pohlmann found the “key” provision in
    this trust language was the discretion afforded the trustee, and
    concluded that because the trustee could not be compelled to
    distribute the entire corpus, the trust was not an available asset
    for purposes of determining Medicaid eligibility.
    We pause here to acknowledge that our analysis in Pohlmann
    contemplates a binary choice between “support” and “discre-
    tionary” trust provisions for purposes of determining Medicaid
    eligibility. In that regard, the approach adopted in Pohlmann
    is different than our treatment of similar trust terms in cases
    where the question is one of general trust administration or
    interpretation, and not Medicaid eligibility. An example of this
    is Smith v. Smith.47
    In Smith, a former wife sought to compel a trustee to pay
    her former husband’s child support arrearages from the assets
    of a trust which stated its purpose was for the “‘health, sup-
    port, care and maintenance’” of the husband and his issue.48
    The trust further provided that the trustee “‘shall have full,
    absolute and uncontrolled discretionary power and authority
    to exercise or fail to exercise any and all of the powers . . .
    provided . . . .’”49 Smith recognized that because the trust had
    attributes of both a discretionary trust and a support trust, it
    45
    
    Id. at 280,
    710 N.W.2d at 645, quoting Eckes v. Richland Cty. Soc. Ser.,
    
    621 N.W.2d 851
    (N.D. 2001).
    46
    
    Id. at 280,
    710 N.W.2d at 645 (emphasis in original).
    47
    Smith, supra note 8.
    48
    
    Id. at 195,
    517 N.W.2d at 397.
    49
    
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    should be construed as a hybrid of the two—a “discretionary
    support trust.”50 In Smith and other cases construing discre-
    tionary support trusts in a non-Medicaid eligibility context,
    we have rejected the suggestion that either the discretionary
    terms or the support terms must be given operative effect to
    the exclusion of the other, and instead, we attempt to ascertain
    the intention of the testator and interpret the trust in a way
    that gives effect to all its terms.51 Because support terms and
    discretionary terms are often in direct conflict with one another
    in a discretionary support trust, we have reconciled that ten-
    sion by recognizing that although beneficiaries of such a trust
    cannot always compel the trustee to make payments for their
    benefit, “the trustee of a discretionary support trust can be
    compelled to carry out the purpose of the trust in good faith.”52
    In Smith, we applied that “good faith” rule and concluded that
    payment of the child support arrearage would not further the
    purpose of the trust, because the husband’s issue had become
    emancipated. As such, we held the trustee could not be com-
    pelled to distribute trust assets from the discretionary support
    trust to satisfy the child support arrearage.
    Here, presumably because Eric’s Trust contains both sup-
    port terms and discretionary terms, DHHS urged application
    of the analysis from Smith governing the administration of
    discretionary support trusts, rather than the rule articulated
    in Pohlmann. If the instant case involved a dispute over the
    proper administration of Eric’s Trust, we would agree it is a
    discretionary support trust, and would proceed to apply the
    50
    
    Id. at 198,
    517 N.W.2d at 398.
    51
    See, e.g., Smith, supra note 8; In re Will of Sullivan, 
    144 Neb. 36
    ,
    
    12 N.W.2d 148
    (1943). See, also, Restatement (Third) of Trusts § 60,
    Reporter’s Notes, comment a. (2003) (rejecting historical distinction
    between discretionary trusts and support trusts as unnecessary because
    there is continuum of discretionary trusts with variety of support standards).
    52
    See Smith, supra note 8, 246 Neb. at 
    198, 517 N.W.2d at 398
    . Accord
    Doksansky v. Norwest Bank Neb., 
    260 Neb. 100
    , 
    615 N.W.2d 104
    (2000).
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    general rules of construction applicable to such trusts. But
    the analysis of Smith and Pohlmann is not interchangeable,
    because the legal questions are not the same. In Medicaid
    eligibility cases involving testamentary trusts, the question is
    whether the beneficiary can compel a distribution of the entire
    corpus of the trust, not whether the trustee is carrying out the
    purpose of the trust in good faith.
    Here, the district court’s classification of Eric’s Trust as a
    discretionary support trust necessarily took its analysis outside
    the framework of Pohlmann, and consequently the analysis
    did not conform with the applicable law governing Medicaid
    eligibility. Even though Eric’s Trust contained both discretion-
    ary and support terms, the proper framework to apply when
    determining Medicaid eligibility is that set out in Pohlmann.
    Applying Pohlmann to the language of Eric’s Trust, we con-
    clude the trust is discretionary and, as such, it is not an avail-
    able asset.
    The relevant trust language provides:
    5.2 During the term of this trust, my trustee shall apply
    such part of the net income and principal of this trust as
    shall from time to time be necessary or appropriate to the
    support, care, maintenance, medical expense, educational
    expense and general welfare of my trust beneficiaries in
    such amounts and proportions as my trustee, in the sole
    and uncontrolled discretion of my trustee, shall deem
    advisable, and shall accumulate and add to principal any
    net income not used for such purposes.
    [7,8] Pohlmann instructs that when a testamentary support
    trust allows a beneficiary to compel distributions of income,
    principal, or both, for expenses necessary for the beneficiary’s
    support, the trust may be considered as an available asset when
    evaluating Medicaid eligibility. But when a testamentary trust
    grants the trustee uncontrolled discretion over payments to the
    beneficiary, it is considered a discretionary trust for purposes
    of Medicaid eligibility. Because the beneficiary of a discretion-
    ary trust does not have the ability to compel distributions from
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    the trust, only those distributions of income, principal, or both
    actually made by the trustee may be considered as available
    assets when evaluating Medicaid eligibility.
    Considering the terms of Eric’s Trust under the Pohlmann
    framework, we conclude the discretion afforded the trustee
    here is even broader than that considered in Pohlmann. On
    this record, we conclude Eric lacks the ability to compel dis-
    tribution of the corpus, and it thus is not an available asset
    for purposes of determining his Medicaid eligibility. As such,
    while any distributions actually made by the trustee can be
    considered as available assets when evaluating Eric’s eligibility
    for Medicaid,53 it was error to find the entire trust corpus was
    an available resource.
    V. CONCLUSION
    Eric’s Trust is properly characterized as a testamentary
    trust, and DHHS regulations provide that testamentary trusts
    may be excluded as resources “depending on the availability
    of the funds to the individual or his/her spouse as specified
    in the terms of the trust.”54 Under Pohlmann, courts deter-
    mine whether testamentary trusts are “available” for purposes
    of Medicaid eligibility by determining whether the trust is
    properly classified as either a support trust or a discretion-
    ary trust. Applying Pohlmann here, we conclude Eric’s Trust
    is a discretionary trust and he does not have the ability to
    compel distribution of the entire corpus. As such, we reverse
    the judgment of the district court and remand the matter to
    the district court for further consideration in accordance with
    this opinion.
    R eversed and remanded with directions.
    53
    See Pohlmann, supra note 13.
    54
    § 001.15A12.