## Facts

- Mildred Keri, about 90 years old, lived in her home and relied on daily assistance from her adult sons, Richard and Charles.
- Mildred suffered irreversible dementia; multiple medical certifications stated she was permanently mentally incompetent and unable to provide for her safety and welfare.
- Mildred’s principal asset was her home (about $170,000); her monthly income was about $1,575 from Social Security and a pension.
- Richard petitioned to be appointed guardian and sought approval of a Medicaid “spend-down” plan under substituted judgment.
- The proposed plan contemplated selling the home, gifting about $92,000 of proceeds to Richard and Charles, and retaining about $78,000 to fund Mildred’s care during the Medicaid transfer-penalty period, after which she would qualify for Medicaid.
- Richard asserted Mildred’s will left her estate to her sons and argued she would likely prefer preserving assets for them rather than exhausting the estate on long-term care costs.
- The trial court appointed Richard guardian but refused to authorize the proposed transfers; the Appellate Division affirmed the denial of Medicaid planning while reversing unrelated directives about sale of the home and nursing-home placement.

## Issues

1. Whether, under substituted judgment, a guardian may transfer an incompetent person’s assets (including gifts to the guardian and close family) to accelerate Medicaid eligibility.
2. What standards and limitations govern judicial approval of Medicaid-related asset transfers in guardianship proceedings.
3. How courts should balance the ward’s probable preferences and autonomy against protection from self-dealing and the need to ensure continuous, adequate care.

## Decision

- The court held that a guardian may, when specified criteria are satisfied, implement Medicaid-related asset transfers under substituted judgment to effectuate the decision the ward would likely have made if competent.
- The court rejected a categorical or effectively prohibitive approach that refused to recognize Medicaid planning as a choice a competent person might reasonably make.
- The court emphasized that any approved plan must protect the ward’s welfare, including ensuring appropriate care throughout any Medicaid ineligibility period and thereafter.
- The court required careful judicial scrutiny where proposed transfers benefit the guardian or other interested family members to guard against self-dealing.
- The matter was to proceed under a fact-sensitive application of the articulated substituted-judgment framework rather than a blanket denial of such planning.

## Legal Principles

- Substituted judgment directs the court to determine, based on evidence, what the incompetent person would have decided if competent, not merely what the court considers objectively preferable.
- Lawful Medicaid planning is not per se improper; transfer “look-back” and penalty provisions reflect that such transfers are regulated and may occur within statutory limits.
- Judicial approval of a transfer plan requires assurance that the ward will receive adequate, stable care and that the plan will not jeopardize the ward’s quality of life or continuity of services.
- In evaluating probable intent, courts may consider the ward’s prior expressed wishes, testamentary plan, past gifting patterns, and other reliable indicia of likely preferences.
- When a guardian proposes transfers that benefit the guardian or close relatives, heightened oversight is required to ensure the plan aligns with the ward’s probable wishes and does not reflect conflicted decision-making.

## Conclusion

The court recognized that a guardian may, under substituted judgment and rigorous safeguards, pursue Medicaid-eligibility planning through asset transfers—including gifts to family—when supported by evidence of the ward’s likely choice and when the plan reliably preserves the ward’s access to appropriate care.


In re Keri, 181 N.J. 50, 853 A.2d 909 (N.J. 2004)