In re Special Needs Trust of Moskowitz

2013 Ohio 1282

• Court: Ohio Court of Appeals
• Decided: March 29, 2013
• Docket: 2011-L-164, 2011-L-165
• Status: Published

Opinion

[Cite as In re Special Needs Trust of Moskowitz, 2013-Ohio-1282.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

LAKE COUNTY, OHIO

IN THE MATTER OF SPECIAL : OPINION NEEDS TRUST OF PERRY MOSKOWITZ : CASE NOS. 2011-L-164 : and 2011-L-165

Civil Appeals from the Lake County Court of Common Pleas, Probate Division, Case Nos. 11 TR 0015 and 27 GU 111.

Judgment: Affirmed.

Thomas J. Sacerich, Sacerich, O’Leary & Field, 8302 Yellowbrick Road, Mentor, OH 44060-4960 (For Appellant, Deborah Moskowitz).

Lori Kilpeck, Stephen M. Bales, and Douglas M. Eppler, Ziegler Metzger, LLP, 925 Euclid Avenue, Suite 2020, Cleveland, OH 44115-1441 (For Appellees, Maureen Kelly Byron and First Merit Bank, N.A.).

THOMAS R. WRIGHT, J.

{¶1} The instant appeal is from a final judgment of the Probate Division of the

Lake County Court of Common Pleas. Appellant, Deborah Moskowitz, seeks reversal

of the trial court’s decision to adopt the recommendation of a court magistrate regarding

the merits of her motion for reimbursement of payments she made as a guardian over a

six-year period. Essentially, appellant asserts that the magistrate and trial court erred in

rejecting her testimony as to whether the disputed payments were made from her own personal funds.

{¶2} Appellant and Perry Moskowitz have been married for over 20 years and

have two children. During the majority of their marriage, the couple resided in Lake

County in their own home, and Perry was able to maintain employment and otherwise

provide for the family. However, in 2002, Perry was diagnosed with numerous physical

and mental afflictions, including severe depression. As a result of his illnesses, he was

no longer able to work, and ultimately had to be placed in a local nursing home.

{¶3} In light of her husband’s difficulties, appellant filed an application with the

trial court for the creation of a guardianship over Perry’s person and estate. In August

2002, the trial court granted the application, and appellant herself was duly appointed as

Perry’s guardian.

{¶4} Over the next five years, Perry’s condition never improved to the point that

he was able to leave the nursing home and resume his previous life. Consequently, the

guardianship has remained in effect. During that particular time frame, appellant filed

with the trial court four separate partial accountings of the various expenditures she had

made under the guardianship. In each of these partial accountings, she indicated that

she had “advanced” certain funds to the guardianship which were used for Perry’s care.

Although appellant was required to amend at least three of the partial accountings, the

trial court eventually approved all four accountings, expressly finding that each was “just

and correct and in conformity to law * * *.”

{¶5} In October 2004, appellant moved the trial court to order the transfer of the

majority of Perry’s remaining assets to her. As the grounds for the motion, she argued

that: (1) she needed the assets to properly provide for herself and the two children; and

2 (2) the Lake County Department of Job and Family Services had determined that a total

of $162,231.97 must be transferred from Perry to her, as his spouse, in order for him to

qualify for full coverage under Medicaid. Upon due consideration, the trial court granted

the motion and ordered that all of Perry’s remaining assets, except for the basic sum of

$1,500, be transferred to appellant.

{¶6} After the transfer of the assets had been completed, it was necessary for

appellant to make considerable tax payments covering the 2005 fiscal year to the State

of Ohio and the federal government. In addition, she used certain funds to assist her

oldest child in attending college and to pay off both mortgages on the marital residence.

During this same general period, she also made three payments directly to the nursing

home in which Perry was living. These payments, which totaled approximately $26,000,

were intended to liquidate an outstanding debt for Perry’s care at the facility. Once the

debt was entirely paid, appellant would be entitled to a greater percentage of Perry’s

monthly Medicaid check for support of herself and her one minor child.

{¶7} After appellant had served as Perry’s sole guardian for nearly five years,

he made a request to the trial court to have her removed from the position. The matter

was referred to a court magistrate for disposition. Upon holding an evidentiary hearing

in December 2007, the magistrate issued a decision in which it was recommended that

appellant be removed as guardian. In support of her decision, the magistrate concluded

that: (1) appellant had developed a contentious relationship with the staff of the nursing

home, and appeared to be more concerned with protecting herself from liability than

caring for Perry; and (2) appellant had been co-mingling her personal assets with the

assets of the guardianship.

3 {¶8} Without benefit of counsel, appellant submitted objections to the foregoing

magistrate’s decision. Upon reviewing the objections, the trial court overruled them and

adopted the magistrate’s recommendation. As a result, the court ordered the removal

of appellant as guardian of Perry’s person and estate. No appeal was ever taken from

this particular judgment.

{¶9} Approximately two years after the appointment of Maureen Kelly Byron as

the new guardian, she moved the trial court for the authority to establish a special needs

trust for Perry’s benefit. As the basis for the motion, Ms. Kelly asserted that, in light of

the recent death of Perry’s mother, he was now entitled to receive the sum of $171,698

from her estate. Ms. Kelly maintained that it was necessary to place the inheritance in a

trust so that he could continue to qualify for Medicaid assistance.

{¶10} Despite the fact that appellant was no longer the guardian, she attended

the hearing which the trial court conducted on the trust motion. At the conclusion of that

proceeding, the trial court invited Ms. Kelly and appellant to submit additional briefing on

the need for the trust. When appellant did not file such a brief, the trial court reviewed

Ms. Kelly’s new brief and granted her motion for the establishment of the special needs

trust. However, approximately five months after the creation of the trust, appellant filed

a motion to stay any disbursement of the inheritance to Perry.

{¶11} In conjunction with the motion to stay, appellant moved the trial court to be

reimbursed for certain expenses she had paid on Perry’s behalf while she was guardian

of his estate and person. Specifically, she asserted that she was entitled to be paid for:

(1) the funds she had “advanced” to the guardianship during its first four years; (2) the

direct payments she had made to the nursing home for Perry’s care; (3) the insurance

4 premiums and property taxes she had paid on the marital residence; (4) the mortgage

payments on the marital residence; and (5) the excessive tax payments made in 2005

after Perry’s remaining assets were transferred to her. In essence, appellant contended

that she should be awarded all of the inheritance funds because the total amount of the

foregoing expenses exceeded $200,000.

{¶12} The motion to reimburse was assigned to the same magistrate who heard

the request to remove appellant as guardian. In June 2011, the magistrate conducted

an abbreviated evidentiary hearing, in which appellant was the sole witness to testify.

As part of that testimony, she expressly stated that each of the disputed payments had

been made from her own personal funds, not funds of the guardianship. In relation to

the payments made after July 2005, appellant admitted that some of the payments were

made from the funds she received from the transfer of Perry’s remaining assets, but that

she considered those specific funds as belonging solely to her. Besides her testimony,

appellant submitted one exhibit, which consisted of her written summary of the disputed

payments and copies of various documents.

{¶13} In her written decision on the motion to reimburse, the magistrate primarily

concluded that appellant was not entitled to be compensated because her evidence was

insufficient to demonstrate that the disputed payments had been made with funds from

her own personal accounts. In support of the conclusion, the magistrate noted that she

had failed to provide any definitive testimony concerning the extent of her employment

during the relevant period. The magistrate further noted that the distinction between the

assets of the guardianship and appellant’s assets was unclear, and that one reason why

appellant had been removed as guardian was her co-mingling of the assets. Therefore,

5 the magistrate recommended that the funds from the inheritance remain in the trust.

{¶14} As part of her objections to the magistrate’s decision, appellant challenged

the rejection of her specific testimony regarding the source of the funds for the disputed

payments. In overruling her objections in its final judgment, the trial court held that the

rejection of her testimony was warranted because her sole exhibit did not provide any

verification that the funds in question had come from her own personal assets. In

addition, like the magistrate, the trial court emphasized that appellant’s removal as

guardian had been based in part upon her co-mingling of her own personal assets with

the assets of the guardianship. In light of this, the court adopted the magistrate’s

decision and denied appellant’s motion for reimbursement from the inheritance funds.

{¶15} In appealing the foregoing judgment to this court, appellant has asserted

four assignments of error for review:

{¶16} “[1.] It is an error for the Court to adopt the Magistrate’s decision to not

reimburse [appellant] on the moneys paid to Madison Health Care on behalf of the

Ward.

{¶17} “[2.] It is an error for the Court to find that Exhibit 1 was not supported by

evidence that [appellant] advanced her own, individual assets.

{¶18} “[3.] It is an error for the Court to fail to award [appellant] the funds she

advanced to the Guardianship for the care of the Ward.

{¶19} “[4.] It is an error for the Court to adopt the Magistrate’s decision to not

reimburse [appellant] for the payment of the Ward’s bills and charging her with 100% of

the parties’ tax liability.”

{¶20} Since appellant’s first three assignments raise similar points, they will be

6 addressed together. Essentially, she challenges the merits of the magistrate’s finding

on the central issue of whether she used her own funds in either paying debts directly

for Perry or advancing money to the guardianship. First, appellant maintains that, as a

matter of law, the magistrate erred in holding that the funds she derived from the 2005

transfer of Perry’s remaining assets did not belong solely to her. Second, in relation to

her monetary advances to the guardianship from 2002 through 2005, she submits that

the magistrate should have found that the trial court’s approval of her four accountings

constituted judicial acknowledgement of the fact that the funds at issue had come from

her own account.

{¶21} Regarding appellant’s first argument, this court would initially note that the

majority of the payments for which she sought reimbursement were taken directly from

the funds she obtained through the 2005 transfer of Perry’s remaining assets. A review

of the transcript of June 2011 evidentiary hearing readily confirms that, in testifying on

her own behalf, appellant stated that she used the “transfer” funds to liquidate the two

mortgages on the marital residence, make two payments on a debt to the nursing home,

and pay certain tax liabilities to the state and federal governments. In concluding that

appellant was not entitled to be reimbursed for her use of any of the “transfer” funds, the

magistrate emphasized that, even though the trial court had approved the transfer of the

assets to her, there was no indication in the record that she had exclusive control over

the use of the resulting funds.

{¶22} Upon reviewing the relevant federal and state law, this court holds that the

trial magistrate’s finding as to the extent of appellant’s control over the “transfer” funds

was technically incorrect. In order for a Medicaid applicant to be entitled to benefits, it

7 must be shown that the applicant does not have any ability to obtain access to funds in

an amount greater than $1,500. See Martin v. Ohio Dept. of Human Services, 122 Ohio

App.3d 679, 682 (2d Dist.1997). Hence, in the instant matter, Perry could only qualify

for Medicaid if his ownership or control over the disputed assets had been completely

extinguished. To this extent, appellant was given total control over those assets when

they were transferred to her; i.e., she became the sole owner of the resulting funds.

{¶23} Nevertheless, the mere fact that the “transfer” funds belonged to appellant

is not dispositive of the issue of whether she was entitled to reimbursement. As

previously mentioned, as a distinct basis for her finding that appellant had not carried

her burden of proving that the disputed payments had been made from her own

personal funds, the magistrate referred to the fact that appellant had earlier been found

to have co-mingled her own assets with those of the guardianship. Furthermore, in

upholding the denial of the motion for reimbursement, the trial court also expressly

referenced the prior finding of co-mingling.

{¶24} Our review of the trial record verifies that, in deciding that appellant should

be removed as guardian in January 2008, the magistrate specifically found that

appellant had failed to keep her own assets completely separate from those of the

guardianship. The trial record further shows that the trial court adopted the magistrate’s

decision regarding the “removal” issue in all respects. Moreover, this court would note

that the co-mingling finding was made after the 2005 transfer of Perry’s remaining

assets. Finally, there is no dispute that appellant never pursued an appeal of the

“removal” determination.

{¶25} A probate court’s judgment ordering the removal of a guardian is viewed

8 as a final order which is subject to immediate appeal. In re: Guardianship of Escola, 41

Ohio App.3d 42, 43 (5th Dist.1987). Therefore, by failing to pursue a direct appeal of

the final removal judgment, appellant allowed the magistrate’s co-mingling finding to

become the “law” of the underlying case. In re Swingle, 5th Dist. No. CT08-0060, 2009-

Ohio-1194, ¶13. In other words, by not appealing in a timely manner, appellant waived

the ability to contest the co-mingling finding for purposes of any subsequent

proceedings in the underlying guardianship case.

{¶26} Given the prior finding of co-mingling, whenever appellant made any of the

disputed payments, she could not establish that she was employing her own funds

rather than funds that already belonged to the guardianship. Obviously, if appellant was

using guardianship funds, she would not be entitled any reimbursement. This logic

would not only apply to any payments made from the funds derived from the transferred

assets, but also to any of the four alleged advances which she deposited into the

guardianship account during the four-year period ending in 2005. As to the advances,

since the issue of co-mingling of assets was not before the trial court when it reviewed

the four partial accountings, its approval of the accountings did not constitute a

determination that the advances consisted solely of appellant’s own personal funds.

{¶27} As part of her argument concerning the funds derived from the transfer of

Perry’s remaining assets, appellant submits that, once the transfer took place in 2005,

Perry was only allowed to have the sum of $1,500. Building upon this, she argues that,

since the payments she made with the “transfer” funds were substantially greater than

$1,500, the only logical conclusion is that she could not have been using guardianship

funds to make those particular payments. Without commenting upon the merits of this

9 argument, this court would indicate that appellant’s point would clearly be relevant to the

issue of whether she was actually guilty of co-mingling of assets during that stage of the

guardianship. Hence, if we were to address the point in the context of this appeal, we

would essentially be allowing appellant to re-litigate the co-mingling issue when the

point could have been raised in a direct appeal from the removal determination.

{¶28} As a final point, appellant again notes that, after she testified that all of the

disputed payments were made from her personal accounts, no evidence was presented

which contradicted her testimony. However, once it had been established in the case

that she had engaged in the co-mingling of her assets with the guardianship assets, the

magistrate and the trial court could justifiably conclude that appellant’s general

statement was not believable unless it was supported by more specific documentary

evidence. A review of the trial transcript indicates that, although appellant introduced

into evidence copies of some of the checks she issued, she never gave any evidence

expressly showing the source of the underlying funds. Under such circumstances, it

cannot be said that the magistrate or trial court abused its discretion in rejecting

appellant’s evidence as being insufficient to carry her burden of proof.

{¶29} Simply stated, in light of the prior finding in the case as to the propriety of

appellant’s acts as guardian for her husband, neither the magistrate nor the trial court

were obligated to find her general testimony as to the source of the disputed payments

credible. Accordingly, since the magistrate’s finding on the controlling factual issue, i.e.,

whether the disputed payments were made from appellant’s personal funds, was

supported by the manifest weight of the evidence, each of her first three assignments

lack merit.

10 {¶30} Under her fourth assignment, appellant has raised a separate issue as to

the legal propriety of not allowing her to be reimbursed for the extra tax payments she

was required to make for the 2005 fiscal year. She asserts that, as a result of the denial

of her motion, she was obligated to pay 100% of the extra tax debt, notwithstanding the

fact that a joint tax return was filed. Based upon this, appellant maintains that the trial

court’s decision was simply inequitable.

{¶31} As to the point, this court would indicate that appellant’s entire argument is

predicated upon the assumption that only her personal funds were used to pay the extra

tax debt. Given our analysis under the first three assignments, this assumption is not

appropriate; i.e., appellant’s evidence was insufficient to show that guardianship funds

were not used to pay the tax debts. Clearly, if appellant used her guardianship funds to

pay the tax debts, there would be no equitable reason to reimburse her. Alternatively, it

must also be noted that appellant never testified as to the exact reason why additional

taxes had to be paid for 2005. In the absence of a proper explanation, a determination

of the equities of the situation is not possible. Therefore, appellant’s final assignment of

error also lacks merit.

{¶32} Consistent with the foregoing analysis, each of appellant’s four

assignments are without merit. Accordingly, it is the judgment and order of this court

that the judgment of the Lake County Court of Common Pleas, Probate Division, is

affirmed.

TIMOTHY P. CANNON, P.J.,

DIANE V. GRENDELL, J.,

concur.