South Dakota Supreme Court Revoked Disclaimer Used To Obtain Medicaid

The Supreme Court of South Dakota ruled that a son could notwithhold assets from his mother suffering from dementia for Medicaid purposes.In 2008, Arline Shipman was moved to a nursing home because of her dementia.However, social services revoked Arline’s admission to a nursing home due toher resources. It was only after Eugene, Arline’s husband, paid out over$100,000 in nursing home health care costs that Arline became eligible for longterm Medicaid aid.

Due to the substantial amount of money spent on nursing homecosts, Arline’s husband disinherited her from his will. Arline’s attorney drafteda document disclaiming any inheritance from Eugene. After Eugene’s death,Arline’s guardian ad litem petitioned the court for half of his estate citingSouth Dakota law.   

In Shipman v. South Dakota, the court held that Arline was entitled to receive half ofthe estate because it was her elective share, not fulfilled by the spousalsupport for her nursing home care. Moreover, the court revoked the disclaimerstating it would be in Arline’s best interest and that the beneficiaries underthe will would not be prejudiced. The court reasoned that the disclaimer wasbeing used as an estate-planning tool to obtain Medicaid.

See Jeff D. Gorman, Widow With Dementia Must Get Inheritance, Courthouse News, Jun. 12, 2013.