Belshe v. Hope

In Belshe v. Hope (1995) 33 Cal. App. 4th 161, the Court of Appeal considered whether property passing by way of a revocable inter vivos trust was part of the estate of the decedent for purposes of recovery of Medi-Cal benefits. The beneficiaries of Myrtle Hope's trust contended that section 14009.5 of the Welfare and Institutions Code impermissibly enlarged the scope of recovery allowed under federal law by allowing recovery from outside the estate. (Hope, supra, 33 Cal. App. 4th at p. 170.) The court analyzed whether the federal statute, which before 1993 did not define "estate," included nonprobate transfers on death. There had been a vociferous debate on the scope of an "estate" prior to 1993. The court in Hope was part of that debate. In its attempt to decipher congressional intent, the court examined the purpose of the Medicaid Act. "One of the express purposes of the Medicaid Act 'is to enable "each state, as far as practicable under the conditions in such state, to furnish . . . medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services . . . ." (42 U.S.C. 1396.) '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. Furthermore, if a person has assets available to pay for the benefits, then the state should be allowed to recover from those assets because that person was not fully entitled to all benefits." (Hope, supra, 33 Cal. App. 4th at p. 173.) The court found the term "estate" ambiguous because it could mean probate estate or taxable estate. Turning to the Internal Revenue Code, wherein Congress included revocable transfers in the value of the gross estate for federal taxes, the court concluded that Congress intended the term "estate" to be broader than the probate estate. According to the court in Hope, if Congress had intended such a narrow definition, it would have said so. (Hope, supra, 33 Cal. App. 4th at pp. 173-174.) The court rejected the beneficiaries' argument that the 1993 amendment defining "estate" was compelling evidence that Congress had intended to broaden the definition, and therefore, a pre-1993 "estate" must be limited to the common law definition. Because the amendment did not merely define "estate" but contained major substantive changes and additions, the court concluded "that Congress was merely clarifying the original intent by expressly declaring the meaning of the words used in the act. We find Congress intended the term 'estate' to have a broad meaning. By including probate and nonprobate transfers on death in the estate, the purposes of the act will be better achieved and the broad definition will ensure that assets of a recipient are used for the cost of care rather than given away." (Hope, supra, 33 Cal. App. 4th at p. 175.)