Father's Transfer of House to Daughter Before Entering Nursing Home Was Not Fraudulent

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A New Jersey appeals court rules that a nursing home that sued a father who transferred his home to his daughter before he entered the nursing home and applied for Medicaid failed to prove the transfer was fraudulent. Future Care Consultants v. Abraham (N.J. Super. Ct., App. Div., No. A-1533-16T2, Dec. 18, 2017).

Alwyn Trotman owned property in New Jersey. When he was 90 years old, he had trouble keeping up the property, so he asked his daughter, Barbara Abraham, to assume responsibility for it. In 2011, Mr. Trotman executed a deed giving Ms. Abraham a 99 percent interest in the property. In 2013, he entered a nursing home and applied for Medicaid benefits. Because of the transfer, the state imposed a 21-month penalty period. When Mr. Trotman died in June 2015, he owed the nursing home $332,460.60. Ms. Abraham transferred the property to a family friend who had been staying in the house and fixing it up.

The nursing home sued Ms. Abraham for fraudulent transfer. The trial court found that at the time of the transfer, no one anticipated that Mr. Trotman would need nursing home care. The court ruled for Ms. Abraham and the nursing home appealed.

The New Jersey Superior Court, Appellate Division, affirms, holding that the nursing home did not present enough evidence to prove Mr. Trotman committed fraud. According to the court, while there were some “badges of fraud” in the transfer, Mr. Trotman was in good health and in control of his own affairs and there was no evidence that he made the transfer with the actual intent to defraud the nursing home or incur a nursing home debt he could not pay.

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