In re The Conservatorship of Cody Lee Wade , 484 S.W.3d 151 ( 2015 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
June 09, 2015 Session
IN RE THE CONSERVATORSHIP OF CODY LEE WADE
Appeal from the Chancery Court for Weakley County
No. 20132 R. Lee Moore, Jr., Judge
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No. W2014-01769-COA-R3-CV – Filed August 5, 2015
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The trial court approved Petitioners‟/Conservators‟ petition to establish a Supplemental
Needs Trust for their Ward but declined to approve a proposed remainder provision
naming two charities as beneficiaries. The trial court ruled that any amounts remaining
in the Trust when it terminated would be distributed under the laws of intestate
succession. The trial court also excluded evidence offered by Petitioners to demonstrate
what they asserted was the Ward‟s intent. We affirm, as modified.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed
as Modified and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which BRANDON O.
GIBSON, J. and ROGER A. PAGE, SP. J., joined.
William L. Harbison, Carla L. Lovell, and Lisa K. Helton, Nashville, Tennessee, for the
appellants, Ronnie Wade and Reba Wade.
James H. Bradberry, Dresden, Tennessee, for the appellee, Kimberly C. Casner.
OPINION
This dispute concerns the remainder provision in a proposed “Supplemental Needs
Trust” settled in accordance with 42 U.S.C. § 1396p(d)(4)(A). The background facts
relevant to our disposition of the issues raised on appeal are not disputed. Cody Lee
Wade (“Cody”) was born in September 1989 and has lived with his grandparents,
Appellants Ronnie and Reba Wade (“the Wades”), since 1999. Appellee Kimberly C.
Casner (“Ms. Casner”) is Cody‟s mother. In June 2007, Cody was seriously injured in an
automobile accident shortly before his eighteenth birthday. In August 2007, he was
rendered physically and mentally permanently disabled, apparently as the result of
improper medical treatment. Ms. Casner and Cody‟s father, Tony Wade (“Mr. Wade”),
consented to the appointment of the Wades as Cody‟s co-conservators, and the Chancery
Court for Weakley County appointed the Wades co-conservators of Cody‟s person and
estate by order entered September 4, 2007.
Friction arose between Ms. Casner and the Wades almost immediately thereafter.
Lengthy, acrimonious proceedings ensued, and, in April 2009 and January 2014, the trial
court denied Ms. Casner‟s petitions to modify its 2007 order to appoint her conservator.
In its January 2014 order, the trial court noted that a medical malpractice action had been
filed on Cody‟s behalf and instructed the Wades to comply with Tennessee law with
respect to any amounts that might be recovered.
The medical malpractice action was settled on January 30, 2014. In April 2014,
the Wades filed a petition seeking court approval of a Supplemental Needs Trust (“SNT”
or “the Trust”) for Cody‟s benefit. The SNT was to be settled with funds received from
the malpractice settlement. In their petition, the Wades asserted that, under Tennessee
Code Annotated § 34-1-121, the trial court had broad authority to approve the SNT. The
Wades served their petition on Mr. Wade and Ms. Casner as interested parties as Cody‟s
presumptive intestate heirs. Article II, Section 8, of the SNT submitted to the trial court
provided that, upon Cody‟s death, remaining Trust assets would be distributed to pay any
taxes and administrative expenses and to reimburse appropriate State agencies for
amounts paid on Cody‟s behalf pursuant to 42 U.S.C. § 1396p(d)(4)(A). Section 8(c)
provided that any amounts remaining after reimbursement to the State would be
distributed in equal shares to two charities that the Wades had chosen.
Mr. Wade filed a response in support of the Wades‟ petition. Ms. Casner filed a
motion to intervene in the matter and answered the petition on June 5, 2014. In her
answer, Ms. Casner acknowledged the trial court‟s broad authority to direct the
management of Cody‟s assets so as to further Cody‟s best interests. She asserted,
however, that the court did not have the authority to approve distribution of the residue of
the Trust other than by intestate succession as set forth in Tennessee Code Annotated §
31-2-104. She prayed the court to dismiss the Wades‟ petition or to modify it in
accordance with section 31-2-104.
At the hearing of the matter on July 10, 2014, the trial court excluded evidence
offered by the Wades that purported to demonstrate Cody‟s desire to “make contributions
to society.” The trial court approved all provisions of the SNT as proposed by the Wades
except Article II, Section 8(c). The court amended the Section to provide that “any
distributable funds remaining at the death of Cody Lee Wade shall be distributed to the
heirs of Cody Lee Wade according to the Tennessee laws of intestate succession.” The
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trial court also rejected the Wades‟ contention that the proposed remainder provision
should be approved under the doctrine of substituted judgment. This appeal followed.
Issues Presented
The Wades raise two issues for our review, as we succinctly state them:
1) Whether the trial court erred by holding that, after Cody‟s death and
reimbursement to the State of amounts paid on Cody‟s behalf, the residue of the SNT
must be distributed under the laws of intestate succession pursuant to Tennessee Code
Annotated § 31-2-104.
2) Whether the trial court erred by excluding as hearsay an essay Cody wrote in
school, prior to his accident and becoming disabled, which was offered to demonstrate
“Cody‟s goal to make contributions to society during his lifetime for which he would be
remembered at death.”
Standard of Review
Our discussion of the first issue presented by the Wades for our review requires us
to determine whether, under Tennessee Code Annotated § 34-1-121(a), a trial court has
the authority to approve the distribution of the residue of a self-settled SNT established
by the conservator of a ward other than by intestate succession pursuant to Tennessee
Code Annotated § 31-2-104 where 1) the ward has not executed a will and 2) the ward
lacks testamentary capacity. This question requires us to construe the scope of the trial
court‟s authority under section 34-1-121. Issues of statutory construction are questions of
law. Accordingly, our review is de novo with no presumption of correctness afforded to
the trial court‟s decision. Brundage v. Cumberland Cnty., 357 S.W.3d 361, 364 (Tenn.
2011).
If we determine that the trial court has the discretion to approve distribution of the
residue of an SNT other than by intestate succession under the circumstances present
here, then we must determine whether the trial court abused its discretion in this case. An
abuse of discretion occurs when the trial court applies an incorrect legal standard or
where its decision is illogical or unreasoned and causes an injustice to the complaining
party. Wright ex rel. Wright v. Wright, 337 S.W.3d 166, 176 (Tenn. 2011) (citations
omitted). Under the abuse of discretion standard of review, the appellate court cannot
substitute its judgment for that of the trial court. Id. Rather, we will presume the trial
court‟s discretionary decision to be correct and will view the evidence in a light most
favorable to its decision. Id. A trial court‟s decision to admit or exclude evidence also is
reviewed under the abuse of discretion standard of review. Mercer v. Vanderbilt Univ.,
Inc., 134 S.W.3d 121, 131 (Tenn. 2004).
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Discussion
The first issue presented by this appeal is one of first impression in Tennessee, and
it appears that there is no case-law addressing SNTs, other than peripherally, in this State.
Accordingly, we begin our discussion with a brief review of the nature of the
Supplemental Needs Trust as an estate management device for disabled individuals. We
next turn to the trial court‟s broad discretion under Tennessee Code Annotated § 34-1-
121 and the doctrine of substituted judgment, and to whether the trial court erred by
disapproving the remainder provision in the present case.
Supplemental Needs Trusts
In 1993, Congress revised the eligibility requirements of Medicaid in reaction to
the use of financial instruments that were developed to circumvent the Medicaid
Qualifying Trust rules. Shawn Patrick Regan, Medicaid Estate Planning: Congress’
Ersatz Solution for Long-Term Health Care, 44 Cath. U. L. Rev. 1217, 1235 (1995). The
Omnibus Budget Reconciliation Act of 1993 (“OBRA „93”) broadened the definition of
“assets” for the purpose of qualifying for Medicaid, “mak[ing] it substantially more
difficult for individuals to qualify for Medicaid by divesting themselves of their income
through outright inter-vivos transfers and through the establishment of trusts or similar
arrangements.” Id. Under OBRA ‟93, trusts established with the assets of a Medicaid
applicant generally “will be counted as an available asset for the purpose of determining
Medicaid eligibility.” Id. at 1240 (citing John J. Regan, Tax, Estate & Financial
Planning for the Elderly § 10.13[1], at 10-83 (1994)). However, certain trusts are
specifically exempt from consideration and will not be considered for the purposes of
eligibility “even when they distribute or receive assets that would otherwise be
considered available.” Id. at 1243 (citing 42 U.S.C. § 1396p(d)(4) (Supp. V 1993)).
42 U.S.C. § 1396p(d)(4)(A) provides an exemption for:
A trust containing the assets of an individual under age 65 who is disabled
(as defined in section 1382c(a)(3) of this title) and which is established for
the benefit of such individual by a parent, grandparent, legal guardian of the
individual, or a court if the State will receive all amounts remaining in the
trust upon the death of such individual up to an amount equal to the total
medical assistance paid on behalf of the individual under a State plan under
this subchapter.1
1
42 U.S.C. § 1382c(a)(3) provides:
(3)(A) Except as provided in subparagraph (C), an individual shall be considered to be
disabled for purposes of this subchapter if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than twelve months.
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A trust established under the exemption must be irrevocable and may be established only
by “a parent, grandparent, legal guardian of the [disabled] individual, or a court[.]” 42
U.S.C. § 1396p(d)(4)(A). Damages or settlement amounts acquired from litigation are
often used to establish the trust, but the exemption is not limited to such assets. Regan,
Medicaid Estate Planning, 44 Cath. U. L. Rev. at 1244 (footnote omitted).
Trusts established under the exemption must supplement rather than supplant
Medicaid benefits. Id. at 1243-44 (footnote omitted). Thus, trust assets may be expended
by the trustee “to pay for quality of life goods and services for the disabled beneficiary.”
Abraham J. Perlstein, Comprehensive Future Care Planning for Disabled Beneficiaries,
27 ESTPLN 358, 365 (Oct. 2000). The trust must contain an express “payback”
provision stating that any amounts remaining in the trust after the death of the
applicant/beneficiary will be used to reimburse Medicaid/the State for expenditures made
on his/her behalf. Id.; Regan, Medicaid Estate Planning, 44 Cath. U. L. Rev. at 1244.
Tennessee Code Annotated §§ 31-2-104 and 34-1-121
In their brief, the Wades assert that, under Tennessee Code Annotated § 34-1-
121(a), the trial court had broad authority to approve the remainder provision contained
in their proposed SNT. They further assert that the trial court had the authority to
approve the provision under the doctrine of substituted judgment. The Wades assert that
designating charities as the beneficiaries of any amounts remaining in the Trust after
Cody‟s death and reimbursement to the State is in Cody‟s best interests “because such
(B) For purposes of subparagraph (A), an individual shall be determined to be under a
disability only if his physical or mental impairment or impairments are of such severity
that he is not only unable to do his previous work but cannot, considering his age,
education, and work experience, engage in any other kind of substantial gainful work
which exists in the national economy, regardless of whether such work exists in the
immediate area in which he lives, or whether a specific job vacancy exists for him, or
whether he would be hired if he applied for work. For purposes of the preceding sentence
(with respect to any individual), “work which exists in the national economy” means
work which exists in significant numbers either in the region where such individual lives
or in several regions of the country.
(C)(i) An individual under the age of 18 shall be considered disabled for the purposes of
this subchapter if that individual has a medically determinable physical or mental
impairment, which results in marked and severe functional limitations, and which can be
expected to result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
(ii) Notwithstanding clause (i), no individual under the age of 18 who engages in
substantial gainful activity (determined in accordance with regulations prescribed
pursuant to subparagraph (E)) may be considered to be disabled.
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designation would reduce the amount of litigation during Cody‟s lifetime by self-
interested beneficiaries.”
Ms. Casner, on the other hand, asserts that, the trial court‟s broad authority
notwithstanding, the disposition of any funds that might remain in the SNT after Cody‟s
death does not affect the care and treatment of Cody during his lifetime. She further
asserts that the authority provided to the trial court by section 34-1-121(a) does not
“trump[]” the intestacy statutes and that the Wades‟ reliance on the doctrine of
substituted judgment is misplaced. With these arguments in mind, we turn to the
statutory provisions.
It is well-settled that our duty when construing a statute is to ascertain and
effectuate the intent and purpose of the General Assembly, neither broadening the statute
beyond its intended scope nor unduly restricting it. Thurmond v. Mid–Cumberland
Infectious Disease Consultants, PLC, 433 S.W.3d 512, 517 (Tenn. 2014); Comm’r of
Powell–Clinch Util. Dist. v. Util. Mgmt. Review Bd., 427 S.W.3d 375, 384 (Tenn. Ct.
App. 2013) (citation omitted). We interpret a statutory section reasonably in light of the
context of the entire statute, construing it according to the natural, ordinary meaning of
the language chosen by the legislature and in a “manner which avoids statutory conflict
and provides for harmonious operation of the laws.” Baker v. State, 417 S.W.3d 428, 433
(Tenn. 2013).
We begin our discussion by noting that it is undisputed that Cody did not execute
a will before becoming disabled, that he has never been married, and that he has no
children. It also is undisputed that the SNT proposed in this case is a self-settled,
irrevocable trust – i.e., the trust is being created with Cody‟s assets – and that Cody lacks
testamentary capacity.
Although Tennessee does not have a statute specifically enabling the creation of
an SNT as provided by 42 U.S.C. § 1396p(d)(4)(A),2 section 106 of Tennessee‟s Medical
Assistance Act provides, in relevant part:
(b) In determining the eligibility of an individual for benefits under this
chapter, resources that have been previously owned and transferred by the
individual, or such individual‟s spouse, shall be treated in a manner
consistent with Title XIX of the Social Security Act, compiled in 42 U.S.C.
§1396 et seq.
Tenn. Code Ann. § 71-5-106 (2012). Additionally, Chapter 1 of Title 34, which governs
guardianships and conservatorships in general, provides, in relevant part:
2
See, e.g., N.Y. Est. Powers & Trusts Law § 7-1.12 (McKinney).
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(a) The court has broad discretion to require additional actions not specified
in this chapter, and chapters 2 and 3 of this title as the court deems in the
best interests of the minor or person with a disability and the property of the
minor or the person with a disability.
Tennessee Code Annotated § 34-1-121(a) (2007). Thus, we agree with the Wades that
the trial court is afforded broad discretion to approve the provisions of a Supplemental
Needs Trust as defined by 42 U.S.C. § 1396p(d)(4)(A).
In their brief, the Wades assert that the trial court‟s discretion extends so far as to
approve distribution of the remainder of Cody‟s Trust assets other than by intestate
succession notwithstanding that Cody lacks testamentary capacity. They assert,
“[p]ermitting the designation of charitable remainder beneficiaries in Cody‟s Trust is
exactly the type of action permitted” by the section. The Wades cite no statute or case-
law to support their argument but rely on Gordon v. Georgetown Univ., No. 02A01-9709-
CH-00218, 1998 WL 242452 (Tenn. Ct. App. May 15, 1998) in support of the
proposition that “application of the intestacy statutes is generally disfavored in
Tennessee, if it can be avoided.”
We must disagree with the Wades that, in the absence of a will and testamentary
capacity on the part of the ward/conservatee, section 34-1-121(a) evidences legislative
intent to permit the trial court to approve a remainder provision in a self-settled SNT in
contravention of the law of intestate succession We must also disagree that Gordon, or
Ledbetter v. Ledbetter, 216 S.W.2d 718 (Tenn. 1949), the Tennessee Supreme Court
case cited by the Gordon court, stands for such a proposition. Rather, the Gordon court
referred to “the general rule in this state disfavoring intestacy where one has undertaken
to make a will.” Gordon v. Georgetown Univ., No. 02A01-9709-CH-00218, 1998 WL
242452, at *4 (Tenn. Ct. App. May 15, 1998) (emphasis added). Quoting Ledbetter for
the law‟s presumption “that one who undertakes to make a will does not intend to die
intestate[,]” the Gordon court noted that, upon consideration of a decedent‟s will, “„the
courts will place such a construction upon the instrument as to embrace all the testator‟s
property, if the words used, by any fair interpretation or allowable implication will
embrace it.‟” Id. (quoting Ledbetter v. Ledbetter, 216 S.W.2d 718, 720 (Tenn. 1949)
(quoting Pritchard on Wills, § 386)). In this case, the Wades are not seeking to
effectuate the provisions of Cody‟s will but to change the character of his property and
circumvent the laws of intestate succession through the remainder provision of an
irrevocable SNT.
Title 31, Chapter 2, sets forth Tennessee‟s law of intestate succession. The
chapter provides, in relevant part:
When any person dies intestate, after the payment of debts and charges
against the estate, the deceased‟s property passes to the deceased‟s heirs as
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prescribed in the following sections of this chapter. Any part of the estate
of a decedent not effectively disposed of by the deceased‟s will passes to
the deceased‟s heirs in the same manner.
Tenn. Code Ann. § 31-2-101 (2007). It further provides:
(a) The intestate share of the surviving spouse is:
(1) If there is no surviving issue of the decedent, the entire intestate estate;
or
(2) If there are surviving issue of the decedent, either one-third ( ⅓ ) or a
child‟s share of the entire intestate estate, whichever is greater.
(b) The part of the intestate estate not passing to the surviving spouse under
subsection (a) or the entire intestate estate if there is no surviving spouse,
passes as follows:
(1) To the issue of the decedent; if they are all of the same degree of
kinship to the decedent they take equally, but if of unequal degree, then
those of more remote degree take by representation;
(2) If there is no surviving issue, to the decedent‟s parent or parents
equally;
(3) If there is no surviving issue or parent, to the brothers and sisters and
the issue of each deceased brother and sister by representation; if there is no
surviving brother or sister, the issue of brothers and sisters take by
representation; or
(4) If there is no surviving issue, parent, or issue of a parent, but the
decedent is survived by one or more grandparents or issue of grandparents,
half of the estate passes to the paternal grandparents if both survive, or to
the surviving paternal grandparent or to the issue of the paternal
grandparents if both are deceased, the issue taking equally if they are all of
the same degree of kinship to the decedent, but if of unequal degree those
of more remote degree take by representation; and the other half passes to
the maternal relatives in the same manner; but if there is no surviving
grandparent or issue of grandparent on either the paternal or maternal side,
the entire estate passes to the relatives on the other side in the same manner
as the half.
8
Tenn. Code Ann. § 31-2-104 (2007). Section 34-1-121 empowers the court to require a
conservator to undertake actions that are in the disabled person‟s best interests. In the
absence of a will or testamentary capacity, it does not authorize the court to direct
distribution of a decedent‟s estate other than by intestate succession.
Doctrine of Substituted Judgment
We must also disagree with the Wades that the trial court erred by disapproving
the proposed remainder provision under the doctrine of substituted judgment. In their
brief, the Wades rely on comment f to the Restatement (Third) of Trusts § 11 in support
of their argument. As the Wades assert, the Restatement states, in relevant part:
Under some circumstances an agent under a durable power of attorney or
the legal representative of a property owner who is under disability may
create a trust on behalf of the property owner.
Restatement (Third) of Trusts § 11(5) (2003). The comment to the section provides, in
relevant part:
The legal representative . . . may also make charitable and other inter-vivos
gifts of the property of a minor or incompetent person, including gift-
transfers in trust, but only to the extent authorized by the appropriate court.
Id. cmt. f. Although the comment provides examples of some circumstances under which
a court may permit a legal representative to “act as appropriate to the settlor‟s estate
planning objectives,” it conditions such action on “what is proper in light of the policies
underlying any applicable prohibition against the making of wills by such fiduciaries.”
The Wades cite Monds v. Dugger, 144 S.W.2d 761 (Tenn. 1940), and Tate v. Tate,
227 S.W.2d 50 (Tenn. 1950), in support of the proposition that courts have the authority
to dispose of a mentally disabled person‟s estate to persons to whom the disabled person
is under no legal obligation. In Monds, the elderly, needy siblings and presumptive heirs
of a mentally disabled, unmarried man who received funds from a war risk insurance
policy and from bonds known as “the soldier‟s bonus” petitioned the court for the
monthly sum of $25 to be set aside for their support and charged against their distributive
estate. Monds v. Dugger, 144 S.W.2d 761, 761-62 (Tenn. 1940). Quoting what was then
codified at § 9652 of the Tennessee Code, the Monds court noted the courts‟
discretionary authority to:
authorize and direct the legal guardian of such incompetent to make
provision or payment from the personal estate of such incompetent for the
care, support and well being of the children, wife or husband, father and/or
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mother, brothers and sisters, or the child or children of any deceased
brother, or sister, preference being given by the court to the dependents of
the incompetent in the order here in set out; provided, that in cases other
than that of the child or children or wife of the incompetent, it must be
shown by competent and satisfactory proof that the person of any other
class mentioned, making application for an allowance, was dependent on
the said incompetent for support and maintenance prior to the time the said
incompetent became mentally disabled, or was, at the time of the
application for such provision or payment, actually dependent, and has a
legal or moral right to claim support from the incompetent were he in the
full possession of his faculties; and provided, further, that in making the
award in favor of such dependent or dependents the court shall take into
consideration the situation, amount and value of the personal estate of the
incompetent at the time of making the award, and any probable increase or
decrease thereof, in the future; the age and condition, physical, financial or
otherwise, of the child, wife or husband, father or mother, brother or sister,
or other person claiming dependency, and see to it that an ample portion of
the incompetent‟s estate, personal or otherwise, shall remain intact for the
support, maintenance, care and comfort of such incompetent.
Id. at 762-63. Noting that the power of a chancery court “to dispose of an incompetent‟s
estate to persons to whom the incompetent was under no legal obligation always has been
regarded as a power to be exercised with great caution[,]” the Monds court affirmed the
trial court‟s judgment denying the petition. Id. at 764.
In Tate, the court acknowledged section 9652 but ruled that a guardian or
conservator cannot maintain an action “to obtain a part of his ward‟s estate,”
notwithstanding the section. Tate v. Tate, 227 S.W.2d 50, 52 (Tenn. 1950). The Tate
court additionally noted that section 9652 as adopted in 1927 “altered the substantive law
theretofore prevailing[.]” The court held that “it [did] not follow that long respected
procedural safeguards were thereby changed or in any manner lessened[.]” Id. The
statutes have long been amended, and neither Monds nor Tate is useful to our analysis in
this case.
The doctrine of substituted judgment originated “in the early nineteenth-century
law of lunacy” and currently is most frequently used in the context of informed consent.
Louise Harmon, Falling Off the Vine: Legal Fictions and the Doctrine of Substituted
Judgment, 100 Yale L.J. 1 (1990). Its contemporary legal definition is:
A principle that allows a surrogate decision-maker to attempt to establish,
with as much accuracy as possible, what healthcare decision an
incompetent patient would make if he or she were competent to do so.
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Black’s Law Dictionary 1658 (10th ed. 2014). The asserted judgment of the mentally
disabled person must be established by clear and convincing evidence. Id. Historically,
the “legal fiction” of the doctrine of substituted judgment has been applied with mixed
motivations. The doctrine‟s mixed history and application is beyond the scope of our
discussion here, but as Ms. Harmon observes, the “legal fiction may be benign in one
context, and dangerous or brutal in another.” Harmon, Falling Off the Vine: Legal
Fictions and the Doctrine of Substituted Judgment, 100 Yale L.J. at 61.
The Wades reference no Tennessee case-law adopting or applying the doctrine of
substituted judgment to permit a conservator to make what effectively is a testamentary
decision on their ward‟s behalf, and we find none. On the contrary, the courts of this
State have adhered to the proposition that “[b]efore the character of the interest in
property held by a [conservatee] can be changed, it must be made manifest that it is
necessary to protect and promote his interest.” Grahl v. Davis, 971 S.W.2d 373, 377
(Tenn. 1998) (quoting Folts v. Jones, 132 S.W.2d 205, 208 (Tenn. 1939)). Additionally,
the courts will preserve the interests of succession as far as possible without sacrificing
the welfare of the ward/conservatee. Id. (quoting Folts, 132 S.W.2d at 208). “A
conservator is not the alter ego of the conservatee . . . and has no authority to exercise an
elective right or power of the conservatee.” Id. (citing Folts, 132 S.W.2d at 207). Thus,
for example, a conservator cannot change the named beneficiary of a ward/conservatee‟s
life insurance policy, “thereby destroy[ing] the beneficiary‟s contingent interest,” without
permission of the court, which will grant such permission only if it is in the
ward/conservatee‟s best interests. Folts, 132 S.W.2d at 208.
We must agree with Ms. Casner that the distribution of whatever assets remain in
the SNT after Cody‟s death and reimbursement to the State for amounts expended on
Cody‟s behalf has no impact on Cody‟s best interest while he is alive. Indeed, the best
interests of the beneficiary of an SNT are furthered by avoiding any conflict of interest
between the Trustee and any potential remainder beneficiaries. Hon. Albert J. Emanuelli,
Supplemental Needs Trusts: The Role of the Surrogate Court, 25 Westchester B.J. 147,
153 (1998). Thus, any amounts remaining in a self-settled SNT established for a
mentally disabled beneficiary should be payable to the beneficiary‟s estate after his/her
death, termination of the SNT, and reimbursement to the State for amounts paid on the
beneficiary‟s behalf. Id.
Holding
In light of the foregoing, we affirm the judgment of the trial court disapproving the
remainder provision of the SNT proposed by the Wades. We modify the judgment to
provide that any amount remaining in the SNT after Cody‟s death and repayment to the
State shall be distributed to Cody‟s estate. Remaining issues are pretermitted as
unnecessary in light of this holding. Costs on appeal are taxed to the Appellants, Ronnie
Wade and Reba Wade, and their surety, for which execution may issue if necessary. This
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matter is remanded to the trial court for further proceedings as may be necessary
consistent with this Opinion.
_________________________________
ARNOLD B. GOLDIN, JUDGE
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