In the Matter of the Estate of Arthur E. Brown , 448 N.J. Super. 252 ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1086-14T4
APPROVED FOR PUBLICATION
IN THE MATTER OF THE ESTATE January 26, 2017
OF ARTHUR E. BROWN, DECEASED.
______________________________ APPELLATE DIVISION
Argued September 28, 2016 – Decided January 26, 2017
Before Judges Fuentes, Simonelli and Gooden
Brown.
On appeal from the Superior Court of New
Jersey, Chancery Division, Probate Part,
Burlington County, Docket No. 2014-0895.
Stephanie L. DeLuca argued the cause for
appellant Estate of Arthur E. Brown (Lenox
Law Firm, attorneys; Ms. DeLuca, of counsel
and on the briefs).
Jennifer L. Cavin, Deputy Attorney General,
argued the cause for respondent New Jersey
Department of Human Services (Christopher S.
Porrino, Attorney General, attorney; Melissa
H. Raksa, Assistant Attorney General, of
counsel; Ms. Cavin, on the brief).
The opinion of the court was delivered by
SIMONELLI, J.A.D.
This appeal involves a priority lien that the Division of
Medical Assistance and Health Services (DMAHS) filed against the
Estate of Arthur E. Brown (Estate) pursuant to N.J.S.A. 30:4D-
7.2 for reimbursement of $166,981.25 in Medicaid benefits Arthur
E. Brown (Arthur)1 received from July 1, 2008, to the date of his
death on April 14, 2013. DMAHS determined that the lien
attached to all assets in the Estate, including Arthur's one-
third elective share against the augmented estate of his wife,
Mary V. Brown (Mary) that included the proceeds from the sale of
the couple's former marital home.
Thomas M. Brown (Thomas) filed a complaint as next-of-kin,
seeking a judgment discharging the lien pursuant to N.J.S.A.
30:4D-7.8. Thomas alleged that because the elective share
statute, N.J.S.A. 3B:8-1, did not apply to Arthur, the lien
claim should be satisfied from the sole assets remaining in the
Estate, approximately $5000. In the alternative, Thomas alleged
that Arthur's elective share was zero when calculated pursuant
to the elective share statutes.
Thomas appeals from the July 29, 2014 Chancery Division
final judgment, which denied entry of judgment discharging the
lien, and from the September 26, 2014 order, which denied his
motion for reconsideration. Thomas also appeals from the May
22, 2015 order, which established the amount of Arthur's one-
third elective share of Mary's augmented estate. We affirm the
judgment and orders.
1
We use first names to identify the parties for ease of
reference. We mean no disrespect in so doing.
2 A-1086-14T4
I.
We begin our analysis with a review of the federal and
state Medicaid statutes and regulations and factual background
relevant to this appeal. Medicaid is a federally-created,
state-implemented program that provides "medical assistance to
the poor at the expense of the public." Estate of DeMartino v.
Div. of Med. Assistance & Health Servs., 373 N.J. Super. 210,
217 (App. Div. 2004) (quoting Mistrick v. Div. of Med.
Assistance & Health Servs., 154 N.J. 158, 165 (1998)), certif.
denied, 182 N.J. 425 (2005); see also 42 U.S.C.A. § 1396-1.
Although a state is not required to participate, once it has
been accepted into the Medicaid program it must comply with the
federal Medicaid statutes and regulations. See Harris v. McRae,
448 U.S. 297, 301, 100 S. Ct. 2671, 2680, 65 L. Ed. 2d 784, 794
(1980); United Hosps. Med. Ctr. v. State, 349 N.J. Super. 1, 4
(App. Div. 2002); see also 42 U.S.C.A. § 1396a(a)-(b). The
state must adopt "reasonable standards . . . for determining
eligibility for . . . medical assistance [that are] consistent
with the objectives of the Medicaid program[,]" Mistrick, supra,
154 N.J. at 166 (quoting L.M. v. Div. of Med. Assistance &
Health Servs., 140 N.J. 480, 484 (1995)), and "provide for
taking into account only such income and resources as are . . .
available to the applicant." N.M. v. Div. of Med. Assistance &
3 A-1086-14T4
Health Servs., 405 N.J. Super. 353, 359 (App. Div.), certif.
denied, 199 N.J. 517 (2009); see also 42 U.S.C.A. §
1396a(a)(17)(A)-(B).
New Jersey participates in the federal Medicaid program
pursuant to the New Jersey Medical Assistance and Health
Services Act, N.J.S.A. 30:4D-1 to -19.5. Eligibility for
Medicaid in New Jersey is governed by regulations adopted in
accordance with the authority granted by N.J.S.A. 30:4D-7 to the
Commissioner of the Department of Human Services (DHS). DMAHS
is the agency within the DHS that administers the Medicaid
program. N.J.S.A. 30:4D-5, -7; N.J.A.C. 10:49-1.1.
Accordingly, DMAHS is responsible for protecting the interests
of the New Jersey Medicaid Program and its beneficiaries.
N.J.A.C. 10:49-11.1(b). The local county welfare agency (CWA)
evaluates eligibility. N.J.S.A. 30:4D-7a; N.J.A.C. 10:71-1.5, -
2.2(c). Through that agency, DMAHS serves as a "gatekeeper to
prevent individuals from using Medicaid to avoid payment of
their fair share for long-term care." W.T. v. Div. of Med.
Assistance & Health Servs., 391 N.J. Super. 25, 37 (App. Div.
2007).
DMAHS provides institutional level Medicaid benefits to
individuals residing in nursing homes pursuant to the Medicaid
Only program, N.J.A.C. 10:71-1.1 to -9.5. Among other
4 A-1086-14T4
eligibility requirements, an applicant seeking such benefits
must have financial eligibility as determined by the regulations
and procedures. See N.J.A.C. 10:71-1.2(a). In order to be
financially eligible, the applicant must meet both income and
resource standards. N.J.A.C. 10:71-3.15. Generally, an
individual's countable available resources cannot exceed $2000.
N.J.A.C. 10:71-4.5(c), -4.8(a). The resource eligibility
requirements for the Medically Needy Program, of which Arthur
was a beneficiary, are the same as those for the Medicaid Only
program, except the resource limit is $4000 for an individual.
N.J.A.C. 10:70—5.1, -5.3(a).
In the eligibility determination, the CWA considers
all income and resources of the individual
. . . and resources which the individual
. . . is entitled to but does not receive
because of action or inaction by the
individual or . . . by any person, including
a court or administrative body with the
legal authority to act in place of or on
behalf of the individual[.]
[N.J.A.C. 10:71-4.10(b)(3) (emphasis
added).]
A "resource" is defined as
any real or personal property which is owned
by the applicant (or by those persons whose
resources are deemed available to him or her
as described in N.J.A.C. 10:71-4.6) and
which could be converted to cash to be used
for his or her support and maintenance.
Both liquid and non-liquid resources shall
be considered in the determination of
5 A-1086-14T4
eligibility unless . . . [they] are
specifically excluded under . . . N.J.A.C.
10:71-4.4(b).
[N.J.A.C. 10:71-4.1(b) (emphasis added).]
See also N.J.A.C. 10:71-4.2. A resource is considered
"available" to an individual when "[t]he person has the right,
authority or power to liquidate real or personal property or his
or her share of it[,]" or when "resources have been deemed
available to the applicant" pursuant to N.J.A.C. 10:71-4.6.
N.J.A.C. 10:71-4.1(c)(1)-(2).
In addition to requiring participating states to adopt
regulations for determining eligibility, federal Medicaid law
requires states "to enact certain 'estate' recovery provisions
as part of their medical assistance plans." Estate of
DeMartino, supra, 373 N.J. Super. at 217 (citing 42 U.S.C.A. §§
1396a(a)(18), 1396c, 1396p(b)(1)). Specifically, "[i]n the case
of an individual who was [fifty-five] years of age or older"
when he or she received medical assistance, states are required,
in pertinent part, to "seek adjustment or recovery from the
individual's estate, but only for medical assistance consisting
of . . . nursing facility services, home and community-based
services, and related hospital and prescription drug
services[.]" 42 U.S.C.A. § 1396p(b)(1)(B). "States may recover
Medicaid benefits after the death of the recipient's surviving
6 A-1086-14T4
spouse provided that the Medicaid recipient leaves 'no surviving
child who is under age 21, or . . . is blind or permanently and
totally disabled.'" Estate of DeMartino, supra, 373 N.J. Super.
at 217 (quoting 42 U.S.C.A. § 1396p(b)(2)(A)).
Further, to satisfy the federal estate recovery
requirements, states must define a decedent's estate to include
at least "all real and personal property and other assets
included within the individual's estate, as defined for purposes
of State probate law[.]" 42 U.S.C.A. § 1396p(b)(4)(A).
However, federal estate recovery requirements permit
participating states to adopt broader definitions of "estate"
that may include:
any other real and personal property and
other assets in which the individual had any
legal title or interest at the time of death
(to the extent of such interest), including
such assets conveyed to a survivor, heir, or
assign of the deceased individual through
joint tenancy, tenancy in common,
survivorship, life estate, living trust, or
other arrangement.
[42 U.S.C.A. § 1396p(b)(4)(B) (emphasis
added).]
New Jersey has enacted statutes to comply with the federal
estate recovery requirements. N.J.S.A. 30:4D-7.2(a)(2) permits
the Commissioner of DHS to file a lien "against and recovery
sought from the estate of the deceased recipient for assistance
correctly paid or to be paid on his behalf for all services
7 A-1086-14T4
received when he was [fifty-five] years of age or older[.]"
Consistent with federal law, New Jersey has enacted a statute
that defines "estate" as including
all real and personal property and other
assets included in the recipient's estate as
defined in [N.J.S.A.] 3B:1-1, as well as any
other real and personal property and other
assets in which the recipient had any legal
title or interest at the time of death, to
the extent of that interest, including
assets conveyed to a survivor, heir or
assign of the recipient through joint
tenancy, tenancy in common, survivorship,
life estate, living trust or other
arrangement.
[N.J.S.A. 30:4D-7.2(a)(3) (emphasis added).]
N.J.S.A. 30:4D-7(j) requires the Commissioner "[t]o take
all necessary action to recover the cost of benefits correctly
provided to a recipient from the estate of said recipient[.]"
Accordingly, the Commissioner has adopted regulations to comply
with the federal estate recovery requirements. N.J.A.C. 10:49-
14.1(d) authorizes DMAHS to "file any claim or lien against an
estate . . . within three years after receiving actual written
notice from the personal representative of the estate or any
other interested party of the death of the Medicaid
beneficiary." Similar to N.J.S.A. 30:4D-7.2(a)(3), N.J.A.C.
10:49-14.1(l) defines "estate" as follows, in pertinent part:
(l) For purposes of this section, the term
"estate" with respect to a deceased Medicaid
beneficiary shall include:
8 A-1086-14T4
1. All real and personal property and
other assets included within the
individual's estate, as defined in N.J.S.A.
3B:1-1; and
2. For individuals who died on or after
April 1, 1995, the term "estate" shall also
include any other real and personal property
and other assets in which the Medicaid
beneficiary had any legal title or interest
at the time of death, to the extent of that
interest, including assets conveyed to a
survivor, heir or assign of the beneficiary
through joint tenancy, tenancy in common,
survivorship, life estate, living trust or
other arrangement, as well as any proceeds
from the sale of any such property which
remain in the estate of the survivor, heir
or assign of the beneficiary, to the extent
of the beneficiary's interest[.]
[(Emphasis added).]
Our role "is to interpret a federal statute in light of the
purposes that Congress sought to achieve through its enactment."
Estate of DeMartino, supra, 373 N.J. Super. at 219. Thus, we
must "look not only at the particular statutory language but
also to the design of the statute as a whole." Ibid. We should
interpret the statute "in accordance with its ordinary meaning
and in a common sense manner so as to accomplish the purpose and
intent of Congress." Ibid. Congress requires that
participating states adopt estate recovery provisions and
authorized states to adopt a more expansive definition of
"estate" "to address the increased demand for Medicaid benefits
9 A-1086-14T4
from the nation's aging population." Ibid. "Allowing states to
recover from the estates of persons who previously received
assistance furthers the broad purpose of providing for the
medical care of the needy; the greater amount recovered by the
state allows the state to have more funds to provide future
services." Ibid. (quoting Belshe v. Hope, 38 Cal. Rptr. 2d 917,
925 (Cal. Ct. App. 1995)).
In this case, Arthur and Mary lived together in their
jointly-owned condominium before he began living in an assisted
living facility in April 2007, when he was seventy-eight years
old. On July 18, 2007, Mary executed a Last Will and Testament,
naming Thomas and his two siblings as her residual
beneficiaries. Mary excluded Arthur as a beneficiary under her
Will.
On February 6, 2008, Arthur and Mary executed a deed
transferring Arthur's interest in the condominium to Mary. On
April 7, 2008, Arthur was admitted into a nursing home,
suffering from Alzheimer's disease, and soon thereafter applied
for institutional level Medicaid benefits under the Medically
Needy Program. The CWA conducted a resource assessment of
Arthur and Mary as a married couple and determined that they had
$141,732.24 in total countable resources, and Mary had
$70,866.12 in protected community spouse assets. The
10 A-1086-14T4
condominium and an automobile were deemed exempt resources for
purposes of establishing Arthur's Medicaid eligibility.2 After
spending down his share of the couple's resources, Arthur became
eligible for Medicaid benefits, effective July 1, 2008. In
accordance with Medicaid regulations, Arthur submitted
applications for Medicaid benefits every six months until his
death on April 14, 2013.
Mary became ill in November 2009, and died testate on
September 9, 2010.3 The assets in her estate included the
proceeds from the sale of the condominium, bank accounts, and
stock that was transferred to her after Arthur submitted his
first Medicaid application.
In November 2010, Thomas notified the CWA of Mary's death
and the discovery of two life insurance policies with a combined
2
According to DMAHS, shortly before an institutionalized spouse
applies for Medicaid, married couples often transfer the marital
home to the spouse who will remain in the community. See gen.
N.J.A.C. 10:71-4.8(a)(3). Arthur transferred his interest in
the condominium to Mary as a Medicaid planning technique to
maximize resources for her. Because Arthur and Mary held
themselves out to DMAHS as a married couple, Mary was permitted
to retain the condominium and automobile, as well as $70,566.12
in other resources, as her community spousal resource allowance
consistent with N.J.A.C. 10:71-4.8(a)(3). DMAHS emphasizes,
however, that the couple's transfer of the condominium was for
Medicaid eligibility purposes only and did not mean the
condominium was not part of Mary's augmented estate.
3
On September 22, 2010, the Mercer County Surrogate issued
letters testamentary to Thomas.
11 A-1086-14T4
cash surrender value of approximately $1250, which were unknown
to Mary at the time of Arthur's first Medicaid application. In
December 2010, the CWA inquired as to whether Arthur would elect
a spousal share against Mary's estate. Thomas responded that
the elective share statute did not apply to Arthur.4
Consequently, on January 12, 2011, the CWA notified Arthur and
Thomas that Arthur's Medicaid benefits would terminate,
effective June 30, 2011. The CWA also notified them that Arthur
had twenty days to request a fair hearing, his Medicaid benefits
may continue until a final decision was rendered, and Arthur may
be required to repay any Medicaid benefits to which he was not
entitled.5
The CWA claimed that Arthur's waiving of the spousal
elective share amounted to a transfer of an available asset that
subjected him to a penalty period of ineligibility. The CWA
relied on N.J.A.C. 10:71-4.10, which provides as follows, in
pertinent part:
(a) An individual shall be ineligible for
institutional level services through the
Medicaid program if he or she (or his or her
4
Thomas presumably responded on Arthur's behalf pursuant to a
power of attorney.
5
The CWA continued Arthur's Medicaid benefits during the
administrative proceedings until he died. DMAHS posits that
this had no bearing on whether or not he was ultimately entitled
to those benefits.
12 A-1086-14T4
spouse) has disposed of assets at less than
fair market value at any time during or
after the [sixty]-month period immediately
before[.]
. . . .
(b) The following definitions shall apply
to the transfer of assets:
. . . .
3. Assets shall include all income
and resources of the individual and of the
individual's spouse. Assets shall also
include income and resources which the
individual or the individual's spouse is
entitled to but does not receive because of
action or inaction by the individual or the
individual's spouse; or by any person,
including a court or administrative body
with the legal authority to act in place of
or on behalf of the individual or the
individual's spouse; or any person,
including a court or administrative body,
acting at the direction of or upon the
request of the individual or the
individual's spouse. Examples of actions
that would cause income or resources not to
be received shall include, but shall not be
limited to:
. . . .
ii. Waiving the right to receive an
inheritance, including spousal elective
share pursuant to N.J.S.A. 3B:8-10[.]
[N.J.A.C. 10:71-4.10(a), (b)(3)(ii)
(emphasis added).]
Thomas maintained there was no waiver because Arthur had no
right to an elective share. On Arthur's behalf, Thomas
requested an administrative hearing to contest the applicability
13 A-1086-14T4
of N.J.A.C. 10:71-4.10(b)(3)(ii). The matter was transferred to
the Office of Administrative Law (OAL) for a hearing, where
arguments relating to the applicability of the elective share
statutes, N.J.S.A. 3B:8-1, -3, and -5, were also raised. Arthur
moved for summary decision, which the Administrative Law Judge
(ALJ) denied. The ALJ found that Arthur was not excepted from
N.J.S.A. 3B:8-1, the condominium was not excluded from Mary's
augmented estate under N.J.S.A. 3B:8-5, and Arthur was subject
to a transfer of assets penalty because he was entitled to, but
did not claim, an elective share of Mary's estate.
The Assistant Commissioner of DHS denied Arthur's request
for interlocutory review, and Arthur did not pursue an
interlocutory appeal to this court. The OAL scheduled the
matter for a final hearing, but Arthur died before then. The
Estate did not pursue the matter, and the request for a hearing
was withdrawn a year later.
Arthur had received a total of $166,981.25 in Medicaid
benefits from July 1, 2008, until his death on April 14, 2013.
On July 28, 2013, DMAHS filed a priority lien claim against the
Estate pursuant to N.J.S.A. 30:4D-7.2 for reimbursement. On
November 6, 2013, DMAHS filed an amended lien claim to clarify
that the lien attached to all assets in the Estate, including
14 A-1086-14T4
Arthur's elective share against Mary's estate that included the
proceeds from the sale of the condominium.
Thomas, as next-of-kin, filed a complaint in the Chancery
Division, Probate Part, for judgment discharging the lien. He
contended that Arthur had no right to an elective share of
Mary's estate under N.J.S.A. 3B:8-1, which entitles a surviving
spouse to
a right of election to take an elective
share of one-third of the augmented estate
under the limitations and conditions
hereinafter stated, provided that at the
time of death the decedent and the surviving
spouse . . . had not been living separate
and apart in different habitations or had
not ceased to cohabit as man and wife,
either as the result of judgment of divorce
from bed and board or under circumstances
which would have given rise to a cause of
action for divorce or nullity of marriage to
a decedent prior to his death under the laws
of this State.
[N.J.S.A. 3B:8-1.]
Thomas argued that the statute did not apply because the right
to an elective share was personal to Arthur and could only be
exercised during Arthur's lifetime as per N.J.S.A. 3B:8-11,
which provides, in pertinent part, that "[t]he right of
election to take an elective share by a surviving spouse . . .
may be exercised only during his lifetime."
Thomas also argued the statute did not apply because Arthur
and Mary had been living separate and apart at the time of
15 A-1086-14T4
Mary's death, or ceased to cohabit as man and wife under
circumstances that gave Mary a cause of action for divorce
under N.J.S.A. 2A:34-2(f), "[i]nstitutionalization for mental
illness for a period of [twenty-four] or more consecutive
months subsequent to marriage and next preceding the filing of
the complaint[.]" Thomas posited that N.J.S.A. 2A:34-2(f)
applied because Arthur was institutionalized in a nursing home
for Alzheimer's disease.
In the alternative, Thomas contended that Arthur's elective
share was zero because the proceeds from the sale of the
condominium were excluded from Mary's augmented estate under
N.J.S.A. 3B:8-5, which provides, in pertinent part, that "[a]ny
transfer of property shall be excluded from the augmented estate
under [N.J.S.A.] 3B:8-3, if made with the written consent or
joinder of the surviving spouse[.]" Thomas argued that this
statute applied because Arthur willfully and in writing through
the deed transferred his interest in the condominium to Mary.
Thomas also contended that Arthur's elective share was zero
because the value of all property he owned in his own right at
the time of Mary's death is deducted from his elective share
pursuant to N.J.S.A. 3B:8-18, which provides as follows, in
pertinent part:
16 A-1086-14T4
The amount of the surviving spouse's . . .
elective share shall be satisfied by
applying:
a. The value of all property, estate or
interest therein, owned by the surviving
spouse . . . in his own right at the time of
the decedent's death from whatever source
acquired, or succeeded to by the surviving
spouse . . . as a result of decedent's death
notwithstanding that the property, estate or
interest or part thereof, succeeded to by
the surviving spouse . . . as the result of
decedent's death has been renounced by the
surviving spouse[.]
In a July 29, 2014 oral opinion, the trial judge reviewed
the legislative history of N.J.S.A. 3B:8-1 and determined that
Arthur did not fall within the excepted class of surviving
spouses who cannot elect against the deceased spouse's estate
under the statute. The judge rejected Thomas's argument that
Arthur had no right to an elective share because he and Mary had
been living separate and apart at the time of her death. The
judge found that the couple was not divorced, never filed for
divorce, and never intended to file for divorce; rather, because
of Arthur's Alzheimer's disease, the couple decided that Arthur
would first reside in an assisted living facility and thereafter
a nursing home. Citing In re Estate of Hersh, 195 N.J. Super.
74, 77 (App. Div.), certif. denied, 99 N.J. 185 (1984), the
judge determined that mere physical separation because one
spouse was residing in a nursing home was not by itself enough
17 A-1086-14T4
to prevent that spouse from claiming an elective share. The
judge emphasized there was nothing in the legislative history of
N.J.S.A. 3B:8-1 that intended such a result.
The judge also rejected Thomas's argument that Arthur had
no right to an elective share because he and Mary ceased to
cohabit as man and wife, thus giving Mary a cause of action for
divorce under N.J.S.A. 2A:34-2(f). The judge considered a
physician's affidavit stating that Arthur was not competent to
handle his affairs as of July 2008, but found Arthur was not
institutionalized in a psychiatric facility and there was no
guardianship application or judgment of incapacity and no
evidence of his level of capacity prior to Mary's death.
The judge declined to hold that every couple would qualify
for divorce when one spouse suffers from Alzheimer's disease,
because depriving that spouse of the spousal share "would leave
vulnerable adults with an inability to access assets that might
be necessary for their care. This was not the intent of the
[L]egislature." Citing I.G. v. Dep't of Human Servs., 386 N.J.
Super. 282, 291 (App. Div. 2006), the judge also determined that
"where there are limited assets . . . without access to the
elective share, the practical effect is for . . . the cost of
care to be shifted upon the taxpayers. . . . There is no
indication this was the intent of the [L]egislature either."
18 A-1086-14T4
The judge emphasized there was no evidence of marital discord;
rather, through Medicaid planning, Arthur and Mary had worked
together to protect each other by securing assets for their
future use. The judge concluded that the elective share was
available to Arthur even though he was residing in a nursing
home.
The judge also found that despite Arthur having never
exercised the elective share during his lifetime, it was
available to him and his ability to exercise that right while
alive was not excepted from N.J.S.A. 3B:8-1. The judge
concluded that DMAHS's broad estate recovery powers entitled it
to seek reimbursement of the Medicaid benefits an individual
received even where he or she did not pursue the elective share
while alive.
Lastly, the judge found that the transfer of Arthur's
interest in the condominium to Mary was not a transfer within
the ambit of N.J.S.A. 3B:8-3, as that statute applies to
transfers by the decedent, not the surviving spouse.
Accordingly, the judge held that the proceeds from the sale of
the condominium were included in Mary's augmented estate and
there was no basis to discharge the priority lien against the
Estate, as Arthur's elective share of Mary's augmented estate
19 A-1086-14T4
was part of the Estate. The judge memorialized her decision in
a final judgment entered on July 29, 2014.
Thomas filed a motion for reconsideration, arguing that the
judge: (1) failed to calculate Arthur's elective share under
N.J.S.A. 3B:8-15; (2) incorrectly found that DMAHS had advised
Arthur that the elective share statute applied in determining
his Medicaid eligibility; and (3) overlooked the effect of
N.J.S.A. 2A:34-2(f) on limiting Arthur's right to an elective
share under N.J.S.A. 3B:8-1. In a September 26, 2014 order and
written opinion, the judge denied the motion, finding that
Thomas had not requested a calculation of Arthur's elective
share and presented nothing new to warrant reconsideration.
Thomas appealed. Following a Civil Appeals Settlement
Program conference, we remanded the matter for the limited
purpose of calculating Arthur's elective share. On remand,
Thomas calculated Mary's estate at $17,507.41, comprised of
$15,988.12 from two bank accounts and $1,519.29 from
miscellaneous other property. He excluded the proceeds from the
sale of the condominium, the value of the stocks that were
transferred to Mary, and the value of her joint bank account
with Arthur.
In the alternative, Thomas calculated Mary's estate at
$244,347.55, which included the previously excluded assets and
20 A-1086-14T4
other property. Thomas then deducted $70,430.32 for expenses
incurred by Mary's estate, and calculated her net augmented
estate at $173,917.23. Thomas then averred that Arthur's
elective share of Mary's augmented estate was $25,870.85, at the
most, and that the following assets Arthur owned at the time of
Mary's death must be deducted from that amount pursuant to
N.J.S.A. 3B:8-18(a):
1. Checking Account $3,563.21
2. Personal Needs Account 221.12
3. New Jersey Group Life
Ins. Policy 6,726.87
4. Pre-paid Funeral Trust 9,626.01
5. Pre-paid Mausoleum 5,610.006
6. New Jersey Death Benefit 2,073.07
7. Prudential Ins. Policy 4,281.28
Total $32,101.56
Thomas concluded that Arthur's elective share was zero after
deducting these assets.
In a May 22, 2015 written opinion, the judge calculated
Mary's augmented estate at $184,861.58, comprised of $261,848.40
in total estate assets minus $76,986.82 in estate expenses. The
judge noted she had previously ruled that the proceeds from the
sale of the condominium were included in Mary's augmented
estate, and found that Thomas had excluded assets that were
6
The judge re-calculated the pre-paid mausoleum at $5175.
21 A-1086-14T4
included under N.J.S.A. 3B:8-3(a), -6, and -7, including the
transferred stocks, an IRA, and two insurance policies.
The judge then calculated Arthur's elective share at
$48,379.92, comprised of one-third of Mary's augmented estate
($61,620.53) minus the assets Arthur owned at the time of Mary's
death, which the judge calculated at $13,240.61. The judge
declined to deduct the New Jersey Group Life Insurance Policy,
pre-paid funeral trust, and New Jersey Death Benefit from
Arthur's elective share, finding that N.J.S.A. 3B:8-18(a) only
permitted the deduction of assets owned by Arthur at the time of
Mary's death. The judge reasoned that Arthur did not own or
control these assets at the time of Mary's death, and had no
control over and was unable to derive any benefit from them
during his lifetime. The judge memorialized her decision in an
order entered on May 22, 2015.
Thomas appeals from the July 29, 2014 final judgment, and
from the orders entered on September 26, 2014, and May 22, 2015.
On appeal, he reiterates the arguments made to the trial judge.
Because this appeal involves the judge's interpretation of
the Medicaid and elective share statutes, our review is de novo.
Potomac Ins. Co. of Ill. ex rel. OneBeacon Ins. Co. v. Pa.
Mfrs.' Ass'n Ins. Co., 215 N.J. 409, 421 (2013). However, the
trial court's factual findings "are binding on appeal when
22 A-1086-14T4
supported by adequate, substantial, credible evidence." Ibid.
(quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)).
As for the denial of a motion for reconsideration, we have
held that
[r]econsideration itself is a matter
within the sound discretion of the [c]ourt,
to be exercised in the interest of
justice[.] It is not appropriate merely
because a litigant is dissatisfied with a
decision of the court or wishes to reargue a
motion, but should be utilized only for
those cases which fall into that narrow
corridor in which either 1) the [c]ourt has
expressed its decision based upon a palpably
incorrect or irrational basis, or 2) it is
obvious that the [c]ourt either did not
consider, or failed to appreciate the
significance of probative, competent
evidence.
[Palombi v. Palombi, 414 N.J. Super. 274,
288 (App. Div. 2010) (citations omitted).]
We will not disturb a trial court's reconsideration decision
absent a clear abuse of discretion. Pitney Bowes Bank, Inc. v.
ABC Caging Fulfillment, 440 N.J. Super. 378, 383 (App. Div.
2015) (citation omitted). An abuse of discretion "arises when a
decision is made without a rational explanation, inexplicably
departed from established policies, or rested on an
impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J.
561, 571 (2002) (citation omitted). Applying the above
standards, we discern no reason to disturb any of the judge's
rulings.
23 A-1086-14T4
II.
A.
Thomas argues that the Estate had no right to an elective
share of Mary's augmented estate under N.J.S.A. 3B:8-1 because:
(1) Arthur and Mary had been living separate and apart at the
time of her death; and (2) the couple ceased to cohabit as man
and wife under circumstances that gave Mary a cause of action
for divorce under N.J.S.A. 2A:34-2(d) (separation for at least
eighteen months), or N.J.S.A. 2A:34-2(f) (institutionalization
for mental illness for a period of twenty-four or more
consecutive months). These arguments lack merit.
A surviving spouse is entitled to an elective share of one-
third of the deceased spouse's augmented estate provided that at
the time of the decedent's death the couple "had not been living
separate and apart in different habitations or had not ceased to
cohabit as man and wife, either as the result of judgment of
divorce from bed and board or under circumstances which would
have given rise to a cause of action for divorce[.]" N.J.S.A.
3B:8-1. The object of the statute was to prohibit
disinheritance of a surviving spouse who needs continuous
support. McKay v. Estate of McKay, 205 N.J. Super. 609, 618
(Law Div. 1984). The effect of the statute "was to drastically
alter the preexisting law and provide a surviving spouse with an
24 A-1086-14T4
option to take one-third of the estate if he or she were not
adequately provided for by the decedent." Estate of Hersh,
supra, 195 N.J. Super. at 77.
N.J.S.A. 3B:8-1 prevents a spouse, if divorced, from
claiming the right to share in the decedent's estate, and also
prevents a spouse from such entitlement if the parties no longer
live together and were "embarked on a divorce action with good
cause prior to [the spouse's] death[.]" Carr v. Carr, 120 N.J.
336, 345-46 (1990). Hence, a separation without a judgment of
divorce or cause of action for divorce can disqualify a spouse
from being entitled to an elective share. Ibid. However, there
must be evidence, beyond mere separation, of a cause of action
for divorce to disqualify a surviving spouse from elective share
rights. Id. at 344 (citing McKay, supra, 205 N.J. Super. at
621; Estate of Hersh, supra, 195 N.J. Super. at 77-78). Mere
separation is not enough. There must be evidence that the
relationship was "sufficiently removed from the normally thought
of state of matrimony as to make such an election
inappropriate." Estate of Hersh, supra, 195 N.J. Super. at 77.
We have described this situation "as a quasi-divorced state—a
separation either by judicial decree or accompanied by
circumstances which would have enabled the decedent to obtain a
divorce." Ibid.
25 A-1086-14T4
In Estate of Hersh, the couple separated by mutual consent,
were separated for over thirty years, the surviving spouse had
obtained a judgment of separation from bed and board in New York
where the parties were married, and the deceased spouse had
remarried. Id. at 76. We determined that the surviving spouse
had no right to an elective share of the decedent's estate under
N.J.S.A. 3B:8-1 because the evidence showed that the parties
were vested with a cause of action for divorce. Id. at 79.
In Carr, the couple separated thirteen months prior to the
wife having filed a complaint for divorce. 120 N.J. at 340.
The wife was subsequently awarded pendente lite support, among
other things. Ibid. The husband died before the divorce action
concluded, and left his entire estate to his children. Ibid.
The Court held that because the parties had separated and the
wife had embarked on a divorce action with good cause prior to
the husband's death, the wife was not entitled to an elective
share of the husband's estate under N.J.S.A. 3B:8-1.
Here, although living separate and apart for approximately
three years at the time of Mary's death, the couple's
relationship was not sufficiently removed from the normally
thought of state of matrimony that would preclude Arthur from
claiming an elective share of Mary's estate. Estate of Hersh,
supra, 195 N.J. Super. at 77. There was no evidence whatsoever
26 A-1086-14T4
of marital problems or discord, or that the couple was
estranged, no longer considered themselves husband and wife, had
no intention of continuing their marriage, and considered their
marriage "dead." See Altbrandt v. Altbrandt, 129 N.J. Super.
235, 237-38 (Ch. Div. 1974) (holding that the purpose of divorce
on the ground of separation is to "terminate dead marriages"
where the relationship "has so far deteriorated" that one party
seeks a divorce).
Arthur and Mary were married for approximately fifty-nine
years and there was nothing suggesting that Mary was seeking or
even considering a divorce because she and Arthur were
separated. Rather, the only reason for the couple's physical
separation was the unfortunate circumstances of Arthur's
Alzheimer's disease. We conclude that this is not the type of
situation giving rise to a cause of action for divorce under
N.J.S.A. 2A:34-2(d). There was nothing more than the couple's
mere separation, which is not enough.
Nor is this the type of situation that would constitute
grounds for divorce under N.J.S.A. 2A:34-2(f). See E. v. F.,
118 N.J. Super. 491, 493-95 (Ch. Div. 1972) (examining mental
illness, such as paranoid schizophrenia, as a ground for
divorce). Although Arthur's medical condition rendered him
unable to manage himself or his affairs, it did not render him
27 A-1086-14T4
unable to elect against Mary's estate. More importantly, Mary
never sought to divorce him because he had Alzheimer's disease
or for any other reason. Thomas cites no authority to support
his view that N.J.S.A. 2A:34-2(f) applies to a nursing home
resident suffering from Alzheimer's disease or that this statute
precluded Arthur from claiming his elective share. We have
found nothing in the statutory language or legislative history
of N.J.S.A. 3B:8-1, or in case law, that supports such a result.
Accordingly, we conclude the trial judge correctly found that
Arthur was not excepted from his elective share of Mary's
augmented estate under N.J.S.A. 3B:8-1.
B.
Thomas next argues that the Estate had no right to an
elective share of Mary's augmented estate because that right was
personal to Arthur and could only be exercised during his
lifetime as per N.J.S.A. 3B:8-11. This argument lacks merit as
well.
Contrary to Thomas's position, this is not a matter
involving a creditor seeking to recover against a surviving
spouse's elective share, see Aragon v. Estate of Snyder, 314
N.J. Super. 635, 640 (Ch. Div. 1998), nor is it a probate or
estate matter. See In re Estate of Wilma Bilse, 329 N.J. Super.
158 (Ch. Div. 1999), aff'd o.b., 329 N.J. Super. 118 (App. Div.
28 A-1086-14T4
2000). This matter involves a Medicaid recipient and is
governed by broad federal and state Medicaid estate recovery
provisions. Federal Medicaid law requires participating states
to recover benefits paid for nursing facility services from a
deceased Medicaid recipient's estate. 42 U.S.C.A. §
1396p(b)(1)(B). State law empowers the Commissioner to file a
lien and recover against an estate for Medicaid benefits paid to
the deceased Medicaid recipient. N.J.S.A. 30:4D-7.2(a)(2);
N.J.A.C. 10:49-14.1(d). An estate includes not only assets in
an estate, as defined under state probate law, but also any
other assets in which the Medicaid recipient had any legal title
or interest at the time of his death. N.J.S.A. 30:4D-7.2(a)(3);
N.J.A.C. 10:49-14.1(a).
Arthur's elective share of Mary's augmented estate was an
asset in which he had legal title or interest at the time of his
death, and it was an asset that was available to him during his
lifetime. Accordingly, we conclude the trial judge correctly
found that the elective share was part of Arthur's estate and
subject to a Medicaid lien.
III.
A.
In the alternative, Thomas first argues that Arthur's
elective share was zero because the proceeds from the sale of
29 A-1086-14T4
the condominium were excluded from Mary's augmented estate under
N.J.S.A. 3B:8-5, as they were transfers of property with
Arthur's written consent (the deed) and joinder. We disagree.
The augmented estate under N.J.S.A. 3B:8-1
means the estate reduced by funeral and
administration expenses, and enforceable
claims, to which is added the value of
property transferred by the decedent at any
time during the marriage . . . to or for the
benefit of any person other than the
surviving spouse . . . to the extent that
the decedent did not receive adequate and
full consideration[.]
[N.J.S.A. 3B:8-3 (emphasis added).]
However, any transfer of property by the decedent pursuant to
N.J.S.A. 3B:8-3 is excluded from the augmented estate "if made
with the written consent or joinder of the surviving spouse[.]"
N.J.S.A. 3B:8-5.
The decedent, Mary, did not transfer her one-half interest
in the condominium to Arthur. She merely signed the deed
transferring his one-half interest to herself, and she at all
times maintained her ownership of the property. Arthur's
transfer of his interest in the condominium "was not a transfer
within the ambit of N.J.S.A. 3B:8-3 because that statute applies
to transfers by the decedent, not the surviving spouse." Estate
of DeMartino, supra, 373 N.J. Super. at 220, n.1. The same
analysis applies to the stocks and bank accounts transferred to
30 A-1086-14T4
Mary with Arthur's consent. We reject Thomas's tortured
interpretation of N.J.S.A. 3B:8-3 that a transfer by deed from
Mary and Arthur jointly to Mary individually constitutes a
transfer of property by the decedent with the written consent or
joinder of the surviving spouse. Consequently, we conclude the
trial judge correctly found that the proceeds from the sale of
the condominium and the stocks and bank accounts were not
excluded from Mary's augmented estate under N.J.S.A. 3B:8-3 and
-5.
B.
Lastly, Thomas argues that the $6,726.87 New Jersey Group
Life Insurance Policy, the $9,626.01 irrevocable pre-paid
funeral trust, and the $2,073.07 New Jersey Death Benefit should
be deducted from Arthur's elective share pursuant to N.J.S.A.
3B:8-18(a). Thomas does not challenge the judge's use of the
elective share formula in N.J.S.A. 3B:8-1, -3, and -18. Rather,
he argues the judge incorrectly found that these assets had no
value to Arthur at the time of Mary's death. Again, we
disagree.
N.J.S.A. 3B:8-18(a) applies to "[t]he value of all
property, estate or interest therein, owned by the surviving
spouse . . . in his own right at the time of the decedent's
death from whatever source acquired, or succeeded to by the
31 A-1086-14T4
surviving spouse . . . as a result of decedent's death[.]"
(Emphasis added); see also In re Estate of Cole, 200 N.J. Super.
396, 403 (Ch. Div. 1984). Arthur did not own in his own right,
have control over, or derive any benefit from the New Jersey
Group Life Insurance Policy, pre-paid irrevocable funeral trust,
or New Jersey Death Benefit at the time of Mary's death. Had
these assets been available to Arthur when Mary died, which they
were not, he would have exceeded the $4000 resource threshold,
making him ineligible for Medicaid benefits and subject to
reimbursement. N.J.A.C. 10:70-5.1; N.J.A.C. 10:71-4.5(c), -
4.8(a), -5.3(a).
Affirmed.
32 A-1086-14T4