Do-It-Yourself Medicaid Planning Results in Loss of Inheritance

A Mississippi a man who transferred oil interests on his property to his girlfriend in order to conceal them from Medicaid is not entitled to get the interests back, a state appeals court has ruled.

Following his father's death, Rickey Ellzey inherited some property. In 1994, Mr. Ellzey had a heart transplant and he qualified for Medicaid. While he was receiving Medicaid benefits, he learned that an oil well on the inherited property was beginning to produce and that he soon would be receiving royalty checks. Believing that these checks might "have a detrimental effect on his overall health" by affecting his Medicaid eligibility, Mr. Ellzey executed a deed giving his mineral interests in the property to his girlfriend, Sherry James, with the intent that she would return the interests back to him after 14 months.

Ms. James did sign a deed to return the mineral interests, but it was never recorded and the original of this document was lost. After the 14 months had passed, Ms. James refused to give the interests back to Mr. Ellzey, and he filed a complaint in court, asking for their return. The court noted that it could accept a copy of the deed but that it would not do so in this case because that would "help him recover what he lost by defrauding the State of Mississippi." Mr. Ellzey appealed.

The Mississippi Court of Appeals agrees with the lower court, holding that Mr. Ellzey is not entitled to have a court remedy a problem that he created by his own fraudulent act. According to the court, Mr. Ellzey could not use the court's "hands to draw equity from a source his own hands ha[d] polluted."

Had Mr. Ellzey placed his mineral interests in a trust, or used other available planning methods, he would not have been accused of committing a "fraudulent act", and would not have required court assistance to regain title of his property. His failure to utilize the services of an experienced Elder Law attorney resulted in the loss of his inheritance.  To download the full text of this decision, Ellzey v. James (Miss. Ct. App., No. 2006-CA-00758-COA, November 20, 2007). in PDF format, go to: http://www.mssc.state.ms.us/Images/Opinions/CO44777.pdf.