## Facts

- Sarah Arens died leaving a will that distributed her estate in equal shares to her four children, producing about $12,000 for each child.
- The will contained no language referring to a trust and used only terms of an outright bequest.
- One child, Rosemary Arens, was an adult with an intellectual disability who lived in an intermediate-care facility paid for by Medicaid.
- Rosemary’s Medicaid eligibility depended on her having no more than $3,050 in resources.
- Receiving an outright $12,000 inheritance would place Rosemary over the resource limit and risk loss of Medicaid-funded care.
- To protect Rosemary’s inheritance while maintaining Medicaid eligibility, Rosemary’s guardian petitioned the Surrogate’s Court to construe the will as creating either a testamentary trust or a supplemental-needs trust.
- The guardian’s proposed trust terms would limit distributions to income only and would deny the trustee authority to make distributions that would cause a loss of government benefits.
- In the alternative, the guardian sought court authority to renounce (disclaim) Rosemary’s inheritance so Rosemary could remain Medicaid-eligible.

## Issues

1. May a Surrogate’s Court construe a will that makes an outright bequest and contains no trust language as creating a testamentary trust or supplemental-needs trust for a disabled beneficiary to avoid loss of Medicaid eligibility?
2. If the will cannot be construed to create such a trust, may the court authorize the disabled beneficiary’s guardian to renounce the bequest to maintain Medicaid eligibility?

## Decision

- The Surrogate’s Court proceeding concerned a guardian’s request (i) to construe the will as creating a testamentary trust or supplemental-needs trust for Rosemary’s share, and (ii) alternatively, to authorize a renunciation of the share.
- The publicly available case summary does not disclose the court’s ultimate ruling or its reasoning on either requested form of relief.

## Legal Principles

- Will construction generally begins and ends with the words used in the instrument; where the text is an outright bequest and contains no trust terms, a request to treat the gift as a trust asks the court to change the gift’s form.
- Requests to impose a supplemental-needs trust often arise when an outright inheritance would make a disabled beneficiary ineligible for means-tested benefits such as Medicaid.
- A proposed trust structure designed to protect eligibility typically limits distributions and restricts payments that would cause denial of benefits, but the court’s authority to impose that structure depends on the will and applicable law.
- A guardian’s renunciation of a beneficiary’s inheritance is not automatic; it commonly requires court authorization and a determination that the renunciation is proper for the ward.

## Conclusion

Estate of Arens involved a Surrogate’s Court petition by a disabled adult’s guardian seeking to avoid Medicaid disqualification caused by an outright inheritance, either by construing a will with no trust language as creating a testamentary or supplemental-needs trust with strict distribution limits, or, failing that, by obtaining authority to renounce the bequest; the available public summary does not state how the court resolved the petition.


Estate of Arens, New York Law Journal 11/6/92, p. 26, col. 1 (1992)