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Estate of DeMartino v. Division of Medical Assistance and Health Services

November 10, 2004

ESTATE OF MICHAEL DEMARTINO, PLAINTIFF-APPELLANT,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. MON-C-75-02.

Before Judges Lintner, Yannotti and Bilder.

The opinion of the court was delivered by: Yannotti, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 4, 2004

Plaintiff Estate of Michael DeMartino ("Estate") appeals from a judgment of the Chancery Division dismissing the Estate's complaint in which it sought the discharge of a lien filed by defendant Division of Medical Assistance and Health Services ("Division") for the recovery of Medicaid benefits paid for Michael's health care. We conclude that the Division validly asserted a lien for the recovery of Medicaid benefits against the assets of the testamentary trust established for Michael's benefit by his wife, Anne. However, because the trial court did not determine the amount of the lien, we remand for further proceedings.

I.

Michael DeMartino and his wife Anne were the owners of a home at 7-M Dennison Drive, in East Windsor, New Jersey. By deed dated September 15, 1999, Michael made a gift of all of his right, title and interest in the property to Anne. Michael entered the Cranbury Nursing Home on April 1, 2000 and he began receiving Medicaid benefits to pay the cost of his care.

Anne DeMartino died on October 29, 2000, leaving a will dated October 19, 2000 that provided for the creation of a testamentary trust for Michael's benefit. In her will, Anne bequeathed to the trustee that portion of the residue of the estate required to satisfy Michael's elective share pursuant to N.J.S.A. 3B:8-1. According to the will, these monies were to be held by the trustee on certain conditions. The will provided:

3.2.1.1.1. Income - My Trustee shall pay to or apply for the benefit of my Beneficiary all of the net income, in quarterly or other convenient installments.

3.2.1.1.2 Principal - My Trustee shall pay to or apply for the benefit of my Beneficiary such amounts of the Trust principal, or all thereof, in such proportions at such time and in such manner as my Trustee, in my Trustee's sole and absolute discretion, may decide is appropriate for the satisfaction of my Beneficiary's special nonsupport needs, if any. As used in this instrument,"special nonsupport needs" refers to the requisites for maintaining my Beneficiary's good health, safety, and welfare when, in the discretion of the Trustee, such requisites are not being provided by any public agency, office, or department of the state where my Beneficiary lives, or of the United States, or are not otherwise being provided by other sources of income available to my Beneficiary. Special nonsupport needs shall include, but not be limited to, the list of suggested nonsupport items set out in this Section.

The will further provided that upon Michael's death, the trustees shall distribute the remaining principal of the trust equally to Anne's children,"and if any of my children fails to survive me, then to such children's descendents on a per stirpes basis."

Theresa Ramellini and Rosemarie Rumac were designated in the will as co-executors of Anne's estate and co-trustees of the trust established for Michael. Ramellini and Rumac are Anne's and Michael's daughters.

According to the complaint, Anne's estate contained the following assets: a checking account with deposits of $5,000, a car with a"blue book" value of about $1,000, and the former marital residence. On April 3, 2001, the residence was sold for a gross sales price of $67,000, with net sale proceeds of $60,729.27 after payment of closing costs. Thus, the gross value of Anne's estate was $66,729.27. Anne's estate allegedly incurred expenses of $8,034.81, leaving a net estate of $58,424.46.

Michael DeMartino died on May 6, 2001. The trust created under Anne's will was not funded during his lifetime. Ramellini claims, however, $925 of Michael's share of Anne's estate was spent for Michael's meals, entertainment, clothes, haircuts and other needs. Ramellini also asserts that $300 from Michael's share ...


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