In 2003, Mary attempted to engage in elder law planning and executed a deed reserving a life estate for herself and giving her daughter, Carla, a remainder interest in the property. However, the wrong address was listed on the deed. In 1989, Mary, at age 65, begin receiving Medicaid benefits through MassHealth. She continued receiving these benefits until her death in 2018. At Mary’s death, Carla noticed the mistaken deed and moved a Massachusetts court to reform the deed on the grounds of mutual mistake. Would the court oblige Carla? The court first theorized that it must decide if reforming the deed would impact the state’s estate recovery efforts.
In analyzing the case, the court here referred to Franz v. Franz, 308 Mass. 262, 266 (1941) and stated “Reformation of deeds generally is proper where (1) both parties had an identical intention as to the terms of the deed; (2) the deed is materially at variance with that intention; and (3) no innocent third parties will be unfairly affected by the reformation.”
As to the first element of the test, the state tried to argue that it was impossible to know Mary’s intention as she was now deceased. The court disagreed, pointing to affidavits by both Carla and Mary’s elder law attorney that described Mary’s intention at the time the deed was executed.
The court then moved on to analyzing the third element of the reformation test. Would the state be an innocent third party that would be unfairly affected by the reformation? The court first looked at the nature and scope of the state’s interest in the land. G. L. c. 118E, § 31(b) states that the state can recover from a Medicaid recipient’s estate if benefits were provided to a recipient who was 65 years or older as of April 1, 1995. Under state law, “estate” is defined as “all real and personal property and other assets includable in the decedent's probate estate under the General Laws.”
The state, of course, argued that a reformation would unfairly affect their estate recovery efforts. The state pointed to General Builders Supply Co. v. Arlington Co-operative Bank, 359 Mass. 691, 696 (1971), which specifically mentioned that reformation would not be allowed if it would unfairly impact subsequent lienholders. In the end, Carla lost her case and the proceeds of the property went to MassHealth.
The judgment in this case was entered on June 1, 2021. To read the decision, search for Carla Casey’s case here. The case number is 18 MISC 000620.
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