#26512-rev & rem-SLZ

2013 S.D. 42

                           IN THE SUPREME COURT
                                   OF THE
                          STATE OF SOUTH DAKOTA

                                     ****

                    IN THE MATTER OF THE ESTATE OF
                    EUGENE SHIPMAN, ALSO KNOWN AS
                     GENE SHIPMAN, ALSO KNOWN AS
                     EUGENE E. SHIPMAN, DECEASED

                                     ****

                   APPEAL FROM THE CIRCUIT COURT OF
                      THE SIXTH JUDICIAL CIRCUIT
                    GREGORY COUNTY, SOUTH DAKOTA

                                     ****

                THE HONORABLE KATHLEEN F. TRANDAHL
                               Judge

                                     ****

MARTY J. JACKLEY
Attorney General

JEREMY LUND
Special Assistant Attorney General
Pierre, South Dakota                        Attorneys for appellant South
                                            Dakota Department of Social
                                            Services.

JACK GUNVORDAHL of
Gunvordahl & Gunvordahl
Burke, South Dakota                         Attorneys for appellee Estate of
                                            Eugene Shipman.


                                     ****

                                            ARGUED ON MARCH 20, 2013

                                            OPINION FILED 06/05/13
#26512

ZINTER, Justice

[¶1.]        After Arline Shipman moved into a nursing home in 2008, her

husband, Eugene, “spent down” some of their joint funds to pay for Arline’s care and

to qualify her for Medicaid long-term-care assistance. In 2009, Eugene executed a

will, which disinherited Arline. The will indicated that Eugene had disinherited

Arline because he “ha[d] given her sufficient consideration during [his] lifetime.”

On the same day that the will was executed, Arline’s attorney-in-fact (her son,

David) disclaimed any inheritance Arline may have been entitled to receive from

Eugene’s estate “due to the fact that [Eugene had] taken care of [Arline] and paid

for [her] nursing home care[.]” In 2010, while Arline was receiving Medicaid

assistance for her nursing home care, Eugene unexpectedly predeceased her.

Arline’s guardian ad litem subsequently petitioned for an elective share of Eugene’s

estate. The circuit court denied the petition. The Department of Social Services,

who administers the Medicaid program, intervened and moved to reconsider. The

court denied the Department’s motion, and the Department appeals. We reverse.

                            Facts and Procedural History

[¶2.]        Eugene and Arline Shipman were married for over fifty years. In April

2008, Arline moved into a nursing home because she was suffering from dementia,

she required full-time care, and Eugene could no longer care for her. In November

2008, Eugene submitted an application to the Department for Medicaid long-term-

care assistance. After assessing the Shipmans’ financial resources, the Department

concluded that Arline did not qualify for Medicaid because the value of the




                                          -1-
#26512

Shipmans’ combined “countable resources” exceeded the total allowable limit for

long-term care.

[¶3.]         After the Department’s denial of Arline’s initial application, Eugene

spent down $99,953.17 of their joint financial resources to pay for Arline’s nursing

home care. In January 2010, Eugene reapplied for Medicaid on Arline’s behalf. The

Department reassessed the Shipmans’ financial condition, and because their

countable resources were then less than their “protected allowance,” Arline

qualified for Medicaid long-term-care assistance. The Department approved

Arline’s application in February 2010.

[¶4.]         In July 2010, Eugene unexpectedly predeceased Arline. As previously

noted, Eugene’s March 9, 2009 will indicated that he had disinherited Arline

because he “ha[d] given her sufficient consideration during [his] lifetime.” Eugene

bequeathed half of his estate to the Shipmans’ son, David, and the remaining half to

the Shipmans’ grandchildren.

[¶5.]         Although Eugene had disinherited Arline, surviving spouses are

generally entitled to an elective share of a deceased spouse’s estate. See SDCL 29A-

2-202. However, on the same day that Eugene executed his will in 2009, David, as

Arline’s attorney-in-fact, had disclaimed “any inheritance that [Arline] may [have

been] entitled to in the estate of Eugene Shipman . . . due to the fact that he [had]

taken care of [her] and paid for [her] nursing home care[.]” 1



1.      The Estate argues that the disclaimer was in accord with Arline’s “wishes,
        desires, and interests,” emphasizing that she was of “sound mind” when she
        appointed David as her attorney-in-fact in 2005. The Estate, however, makes
        no claim that Arline was of sound mind and capable of making such decisions
                                                            (continued . . .)
                                           -2-
#26512

[¶6.]         David was appointed personal representative of Eugene’s estate (the

Estate) in August 2010. The Estate notified the Department that Arline was

disinherited under Eugene’s will. In response, the Department advised that Arline

would be required to pursue her elective share before receiving further Medicaid

long-term-care assistance.

[¶7.]         A guardian ad litem was appointed to represent Arline’s interests. In

October 2010, the guardian petitioned for an elective share and moved to set aside

the disclaimer. 2 The Estate opposed the petition, arguing that the disclaimer was

valid and enforceable. Alternatively, the Estate argued that Arline had already

received her elective share because Eugene had financially cared for Arline during

his lifetime. The Estate explained that Eugene had cared for her before her

institutionalization and he had used their joint resources to pay for Arline’s nursing

home care until she became eligible for Medicaid.

[¶8.]         After a hearing, the circuit court denied Arline’s petition for an elective

share. The court also denied Arline’s motion to revoke the disclaimer. The court

concluded that Arline had validly disclaimed her right to an elective share. The

court also concluded that Arline had received her “fair share” of Eugene’s estate

when, during the marriage, Eugene used their joint resources to pay for her nursing

home care.

________________________
(. . . continued)
         in 2009, when she was in the nursing home and David executed the
         disclaimer.

2.      The Department states that the motion to set aside the disclaimer was a
        motion to revoke the disclaimer. The Estate does not dispute that
        characterization, and therefore, we refer to it as a motion to revoke.

                                           -3-
#26512

[¶9.]          Because the guardian ad litem indicated that he would not appeal the

circuit court’s decision, the Department moved to intervene and petitioned for

reconsideration. 3 The court reconsidered its decision, but denied the Department

relief on the merits. The court concluded that Arline’s disclaimer was valid and not

subject to revocation. The court also reaffirmed that Arline had already received

her elective share of the estate when the Shipmans’ joint resources were used

during the marriage to pay for Arline’s nursing home care.

[¶10.]         The Department appeals, raising two issues:

               1.     Whether the circuit court erred in concluding that Arline
                      was not entitled to an elective share because she had
                      received her share of the estate during the marriage
                      through Eugene’s use of their joint resources to pay for
                      her nursing home care.

               2.     Whether the circuit court erred in denying the guardian
                      ad litem’s motion to revoke Arline’s disclaimer of her
                      elective share.


3.       Counsel for David also notified the Department that Arline did not have
         sufficient funds to pay for her continuing care and that she was entitled to
         Medicaid assistance from the Department. There is a pending administrative
         proceeding in which David and the Department are litigating whether a
         “transfer penalty” should be imposed on Arline’s receipt of Medicaid benefits
         because she disclaimed her elective share. The Department is arguing for the
         imposition of a transfer penalty on Arline’s benefits because Arline’s
         disclaimer of her elective share was a transfer of her available resources.
         David is arguing there can be no transfer penalty because the circuit court’s
         ruling—that Arline had already received her share of Eugene’s estate during
         his lifetime—controls the outcome of the administrative proceeding. At oral
         argument in this case, the Department indicated that if the circuit court’s
         ruling regarding Arline’s elective share was not challenged, there would have
         been a judicial determination that there were no resources for Arline to
         disclaim, and therefore, Arline could not be penalized for a transfer of
         resources. The Department indicated that it intervened so it would not be
         collaterally estopped from arguing for the imposition of a transfer penalty in
         the administrative proceeding. The administrative proceeding has been
         stayed until this case is resolved.

                                           -4-
#26512

                                          Decision

Jurisdiction to Hear This Appeal

[¶11.]           As a preliminary matter, the Estate challenges this Court’s jurisdiction

to hear the Department’s appeal. The Estate points out that there were no

pleadings attached to the Department’s intervention application in circuit court as

required by SDCL 15-6-24(c). The Estate also points out that the circuit court did

not enter a formal order permitting the Department to intervene.

[¶12.]           We first observe that the Department filed an “application” to

intervene in circuit court “in order to protect its interests arising out of the

surviving spouse’s receipt of Medical Assistance from the Department.” Along with

its application, the Department filed a petition that the court reconsider its decision

together with a memorandum in support of the petition. Those documents

identified the Department’s claims and put all parties on notice of the request to

intervene, the grounds thereof, and the relief requested. The documents

substantially complied with the motion and pleading requirements of SDCL 15-6-

24(c). 4

[¶13.]           We also note that although the circuit court did not enter a formal

order of intervention, it unmistakably granted the intervention request. In its

memorandum decision on the petition to reconsider, the court specifically stated


4.         SDCL 15-6-24(c) provides, in relevant part:

                 A person desiring to intervene shall serve a motion to intervene
                 upon the parties as provided in [SDCL] 15-6-5. The motion shall
                 state the grounds therefor[e] and shall be accompanied by a
                 pleading setting forth the claim or defense for which
                 intervention is sought.

                                             -5-
#26512

that “[the Department] now intervenes and asks this court to reconsider its

decision.” The court then proceeded to reconsider its decision on the merits.

Therefore, although there was no formal order, there is no doubt that the circuit

court granted the Department’s request to intervene and reconsider the court’s

initial decision. Because intervention was allowed in circuit court, this Court has

jurisdiction to consider the Department’s appeal.

Standard of Review

[¶14.]         The parties disagree on the proper standard of review for determining

Arline’s entitlement to an elective share of Eugene’s estate. Under the pre-1995

statutes, entitlement to an elective share was an equitable matter to be determined

by the circuit court. 1980 S.D. Sess. Laws ch. 205, § 5; SDCL 30-5A-5 (repealed

1995). “[T]he equitable determination in an elective share proceeding [was

therefore] within the discretion of the [circuit] court and [would] not be overturned

absent an abuse of that discretion.” In re Estate of Donahue, 464 N.W.2d 393, 395

(S.D. 1990). 5 However, under the statutes enacted in 1995, the surviving spouse is

now entitled to an elective share as a matter of right under a formula. SDCL 29A-



5.       The Estate cites Estate of Karnen, 2000 S.D. 32, 607 N.W.2d 32, for the
         proposition that the standard of review for elective share proceedings under
         the 1995 elective share statutes is abuse of discretion. In Estate of Karnen,
         the issue was whether the circuit court abused its discretion in using an
         inheritance tax table to calculate the value of a life estate for purposes of an
         elective share. Id. ¶¶ 22-25, 607 N.W.2d at 38-40. There was no statutory
         guidance on determining the value of the life estate, and therefore, we
         analyzed the court’s use of inheritance tax tables under the abuse of
         discretion standard. However, today’s case involves the interpretation of the
         elective share statutes. Estate of Karnen is inapposite because we review
         statutory interpretation de novo.


                                            -6-
#26512

2-202. See also 1995 S.D. Sess. Laws ch. 167, § 148. Furthermore, the question in

this case involves statutory interpretation; i.e. whether the current elective share

statutes permit a charge against the elective share for the cost of nursing home care

expended during the marriage. We apply de novo review to the interpretation of the

elective share statutes. See Conservatorship of Didier, 2010 S.D. 56, ¶ 6, 784

N.W.2d 486, 489 (“Questions of law such as statutory interpretation are reviewed by

the Court de novo.”).

Arline’s Entitlement to an Elective Share

[¶15.]         As previously noted, the pre-1995 version of South Dakota’s elective

share statute granted the circuit court discretion in determining a surviving

spouse’s elective share:

               [T]he court upon application of the surviving spouse shall award
               to the surviving spouse such elective share in the remaining
               augmented estate as is equitable taking into account all of the
               circumstances of all interested parties and the length and other
               circumstances of the marriage of the decedent and such
               surviving spouse[.]

SDCL 30-5A-5 (repealed 1995). See also In re Estate of Pejsa, 459 N.W.2d 243, 245

(S.D. 1990). Now, a surviving spouse has a right to an elective share of a deceased

spouse’s estate. SDCL 29A-2-202. 6 Under SDCL 29A-2-202, the surviving spouse’s



6.       SDCL 29A-2-202 provides in relevant part:

               (a) The surviving spouse of a decedent who dies domiciled in this
                   State has a right of election, under the limitations and
                   conditions stated in this Part, to take an elective-share
                   amount equal to the value of the elective-share percentage of
                   the augmented estate, determined by the length of time the
                   spouse and the decedent were married to each other, in
                   accordance with the following schedule:
                                                               (continued . . .)
                                             -7-
#26512

elective share is determined by formula. “SDCL 29A-2-202 is clearly a legislative

determination to provide more uniformity in such awards and a corresponding

reduction in the discretion of the [circuit] court which previously existed under

SDCL 30-5A-5.” In re Estate of Elvik, 1998 S.D. 125, ¶ 15 n.4, 587 N.W.2d 587, 590

n.4.




________________________
(. . . continued)

             If the decedent and the                          The elective-share
             spouse were married to                           percentage is:
             each other:

             ...
             15 years or more .................................... 50% of the augmented
                                                                   estate

             (b) If the sum of the amounts described in §§ 29A-2-207, 29A-2-
                 209(a)(1), and that part of the elective-share amount payable
                 from the decedent’s probate estate and nonprobate transfers
                 to others under § 29A-2-209(b) and (c) is less than $50,000,
                 the surviving spouse is entitled to take a supplemental
                 elective-share amount equal to $50,000, minus the sum of the
                 amounts described in those sections. The supplemental
                 elective-share amount is payable from the decedent’s probate
                 estate and from recipients of the decedent’s nonprobate
                 transfers to others in the order of priority set forth in § 29A-
                 2-209(b) and (c).

             (c) If the right of election is exercised by or on behalf of the
                 surviving spouse, the surviving spouse’s homestead
                 allowance, exempt property, and family allowance, if any, are
                 not charged against but are in addition to the elective-share
                 and supplemental elective-share amounts.

             (d) The right, if any, of the surviving spouse of a decedent who
                 dies domiciled outside this state to take an elective share in
                 property in this state is governed by the law of the decedent’s
                 domicile at death.

                                              -8-
#26512

[¶16.]         Nevertheless, the circuit court made its decision on what it described

as a matter of equity. The circuit court explained that Arline “already received and

benefitted from her rightful share, and her deceased husband’s last will and

testament is reflective of this fact.” On the petition for reconsideration, the court

expressly stated that it had “made an equitable determination that [Arline]

Shipman had in fact already received her elective share of the marital estate when

her late husband, Eugene Shipman, spent down one-half of their marital estate to

pay for the nursing home facility care she received[.]” However, as previously

noted, entitlement to an elective share under SDCL 29A-2-202 is no longer a matter

of equity: it is a matter of right. The circuit court erred in applying equitable

principles rather than SDCL 29A-2-202’s statutory requirements in determining

Arline’s entitlement to an elective share. 7 Because Arline and Eugene had been

married for over fifteen years, Arline had a right to an elective share that was fifty

percent of Eugene’s augmented estate. See SDCL 29A-2-202.

[¶17.]         The circuit court also erred in determining that Arline had “already

received her elective share” because, during the marriage, Eugene used marital

assets to pay for Arline’s nursing home care. First, the record reflects that these

were joint marital assets, and the court did not consider Arline’s ownership interest


7.       Even if the circuit court had been authorized to make an equitable
         determination of Arline’s entitlement to an elective share, the decision in this
         case was not equitable. Prior to Eugene’s death, Eugene spent down
         $99,953.72 of Eugene and Arlines’ joint resources to support Arline in a
         nursing home. But the Department’s brief reflects that if she obtains an
         elective share, Arline would be entitled to approximately $208,388.15, less
         enforceable claims against the Estate. The circuit court also failed to
         consider Arline’s contribution to the joint marital resources that were used
         for her nursing home care.

                                            -9-
#26512

in those assets. Second, Arline’s elective share comes from the augmented estate,

see SDCL 29A-2-209, but expenses paid by one spouse for necessary support of the

other during the marriage are not chargeable against the augmented estate. The

augmented estate consists of certain transfers (not relevant here 8) and property

remaining after the first spouse dies. See SDCL 29A-2-203 (defining the augmented

estate as the sum of the decedent’s net probate estate, certain non-probate

transfers, the surviving spouse’s property, and certain non-probate transfers by the

surviving spouse). And the Legislature expressly delineated what expenses may be

charged against the augmented estate, but the cost of spousal care expended during

the marriage is not one of them. See SDCL 29A-2-204 (“The value of the augmented

estate includes the value of the decedent’s probate estate, reduced by funeral and

administration expenses, homestead allowance, family allowances, exempt

property, and enforceable claims.”). The circuit court acknowledged that “[c]learly,

the money spent by Eugene Shipman on [Arline’s] nursing home care is not a part


8.    The expense of nursing home care paid by one spouse for the support of the
      other during their lifetimes is not a “transfer” that is included in the
      augmented estate. Although a number of non-probate transfers are included
      in the augmented estate, transfers “to or for the benefit of . . . [the] surviving
      spouse” are excluded. SDCL 29A-2-205(2)-(3).

      The Estate, however, argues that Arline agreed to Eugene’s expenditure of
      the funds for her nursing home care, and therefore, she is not entitled to now
      claim that those funds do not satisfy her elective share. The Estate relies on
      In re Estate of Fries, 782 N.W.2d 596, 605-06 (Neb. 2010). In Estate of Fries,
      the Nebraska Supreme Court stated that “[l]ogically, when a spouse agrees to
      a transfer of property that diminishes the eventual decedent’s estate, the
      surviving spouse should not be allowed to reclaim the value of the transferred
      property in the augmented estate.” Id. at 606. But, the Nebraska court was
      speaking of the value of “property” (assets) transferred to a third party rather
      than marital expenses paid by spouses to support each other during the
      marriage. Estate of Fries is inapposite.

                                          -10-
#26512

of . . . the augmented estate[.]” Because the money spent by Eugene to support

Arline during the marriage was not included in or chargeable against the

augmented estate, Arline’s elective share could not be satisfied by the value of those

expenditures.

[¶18.]         More importantly, Arline’s elective share could not be satisfied by

money used during the marriage to pay Arline’s nursing home expenses because

those funds were utilized to fulfill Eugene’s and Arline’s duty to financially support

themselves and each other. “A person shall support himself or herself and his or

her spouse out of his or her property or by his or her labor.” SDCL 25-7-1. As we

noted in In re Estate of Amundson, 2001 S.D. 18, ¶ 16, 621 N.W.2d 882, 886:

“Spouses owe a mutual duty of support during their lives[.]” 9 The joint funds

Eugene spent on Arline’s nursing home care were utilized to satisfy the marital

duty of support during their marriage.

[¶19.]         In contrast, the elective share involves an independent duty for “the

survivor’s financial needs after the death of a spouse.” 10 See id. After the death of



9.       Eugene’s statutory duty to support Arline was not affected by the
         Department’s assessment and calculation of their combined resources. See
         SDCL 28-6-20 (providing that the division of assets for purposes of
         determining eligibility for long-term medical assistance does not “affect any
         state statute concerning the duty to support a spouse[ ]”).

10.      The Estate relies on comments to the Uniform Probate Code that identify the
         purpose of the elective share: “to prevent the surviving spouse from electing a
         share of the probate estate when the spouse has received a fair share of the
         total wealth of the decedent either during the lifetime of the decedent or at
         death by life insurance, joint tenancy assets, and other nonprobate
         arrangements.” See Unif. Probate Code § 2-202 cmt. (pre-1990 version). In
         this case, Arline did not receive a fair share of Eugene’s total wealth.
         Instead, Arline received marital support that Eugene was obligated to
                                                               (continued . . .)
                                             -11-
#26512

one spouse, the duty of support “continues in favor of the survivor in the form of a

claim on the decedent’s estate[;]” i.e., by claiming an elective share. See id. The

circuit court’s reasoning fails to recognize that these duties are independent.

Further, allowing the duty of support owed during the marriage to satisfy the duty

of support owed when one spouse dies would effectively eliminate the elective share.

Under the circuit court’s reasoning, an estate of any deceased spouse could claim

that other ordinary forms of support (food, clothing, and shelter) provided during

the marriage satisfied the surviving spouse’s elective share. This would completely

eliminate the elective share statutes, which are intended “to protect a surviving

spouse from disinheritance[.]” See Estate of Karnen, 2000 S.D. 32, ¶ 14, 607 N.W.2d

at 36. Simply stated, marital assets used by spouses during their lives satisfy their

marital duty of support. Assets in the augmented estate are used to satisfy the

deceased spouse’s independent duty of providing for the surviving spouse’s financial

needs after the deceased spouse’s death. But assets utilized during the marriage to

satisfy the mutual duty of marital support may not be used to satisfy a deceased

spouse’s additional duty to provide post-death support through the elective share.

[¶20.]       We conclude that Arline was entitled to an elective share that could

not be satisfied by the spousal support Eugene was required to provide Arline

during their marriage. Because Arline was entitled to an elective share, we next

determine whether Arline’s disclaimer was revocable by the guardian ad litem.


________________________
(. . . continued)
         provide during the marriage. We also note that this comment was not
         included in the post-1990 version of the Uniform Probate Code adopted in
         South Dakota.

                                         -12-
#26512

Disclaimer of Elective Share

[¶21.]         SDCL 29A-2-801(a) authorizes disclaimers of a surviving spouse’s

elective share. Although the statute provides that the surviving spouse has a “right

to disclaim irrevocably,” see id., “a surviving spouse, if he or she obtains court

approval, has the right to revoke or rescind a disclaimer[,] . . . providing no adverse

rights have intervened and no prejudice has been shown to the creditors of the

widow or widower or to other persons interested in the estate.” In re Estate of Berg,

355 N.W.2d 13, 15 (S.D. 1984). The disclaimer is revocable until the time period to

file a disclaimer has lapsed. See id.

[¶22.]         The Department argues that the guardian ad litem’s motion to revoke

the disclaimer should have been granted because it was in the best interests of

Arline and no other persons interested in the estate would have been prejudiced. 11

The Department also argues that the motion to revoke should have been granted

because the disclaimer was used as an estate planning tool for the Shipmans’ son’s

and grandchildren’s inheritance at the expense of the Department. However, citing

In re Estate of Berg, the Estate argues that Eugene’s heirs were “predetermined” in

the 2009 will, and those beneficiaries would suffer damage to their “legal rights” if

Arline were allowed to revoke her disclaimer.

[¶23.]         We first consider whether the guardian ad litem was acting in Arline’s

best interests in moving to revoke the disclaimer. See In re Guardianship of

Stevenson, 2013 S.D. 4, ¶ 16, 825 N.W.2d 911, 914-15 (“A . . . guardian ad litem . . .

is appointed to act in a protected person’s best interests.”). As we have just ruled,


11.      There is no dispute that the motion was timely.

                                          -13-
#26512

at the time the guardian was appointed, Arline was entitled to an elective share of

Eugene’s estate. The Estate does not dispute that Arline’s failure to pursue her

elective share would compromise Arline’s Medicaid eligibility for nursing home

care. 12 Thus, if the disclaimer were not revoked, Arline may lose Medicaid

eligibility in addition to not receiving her fifty percent share of the augmented

estate. Under the circumstances, it was in Arline’s best interests to revoke the

disclaimer. See Estate of Wyinegar, 711 A.2d 492, 495 (Pa. Super. Ct. 1998) (stating

that it was in the institutionalized surviving spouse’s best interests to seek his

elective share because “[f]ailure to take the election against [the deceased spouse’s

will] could potentially compromise [the surviving spouse’s] entitlement to continued

[public] medical assistance in addition to denying him the benefit of the elective

share”).

[¶24.]         We now address the Estate’s claim of prejudice. See Estate of Berg, 355

N.W.2d at 15. The circuit court did not find that any person interested in the estate

would be “prejudiced.” Rather, after noting the requirements for revoking a

disclaimer under Estate of Berg, the court indicated that the Shipmans’ heirs were

“predetermined” by Eugene’s will.

[¶25.]         The Estate argues that the beneficiaries under the will would be

prejudiced if the disclaimer were revoked because their inheritance was

predetermined and would be reduced. However, the rights of a beneficiary

designated in a will are subject to the surviving spouse’s elective share. See SDCL


12.      We express no opinion regarding the Department’s contention that Arline
         would lose Medicaid eligibility if the disclaimer is valid and enforceable.
         That issue remains to be decided in the pending administrative proceeding.

                                          -14-
#26512

29A-3-101 (“The power of a person to leave property by will, and the rights of . . .

devisees[ ] and heirs to the person’s property are subject to the restrictions and

limitations contained in [South Dakota’s Uniform Probate Code] to facilitate the

prompt settlement of estates. Upon the death of a person, that person’s . . .

property devolves to the persons to whom it is devised by will or . . . to the heirs, . . .

subject to [the] . . . elective share of the surviving spouse[.]”). Therefore, the

interest of the beneficiaries designated in Eugene’s will was always subject to

Arline’s elective share. Those beneficiaries had no predetermined right to an

inheritance that was free of Arline’s elective share. Because no prejudice to

interested parties has been demonstrated on this record, the circuit court erred in

not granting the guardian’s motion to revoke the disclaimer. 13

[¶26.]         We finally note that Medicaid is for “individuals receiving nursing

home . . . care services [that] are in fact poor and have not transferred assets that

should be used to purchase the needed services before Medicaid benefits are made

available.” In re Estate of Meland, 2006 S.D. 22, ¶ 11, 712 N.W.2d 1, 4. “Medicaid .

. . is not to be used as an estate planning tool.” Id. But here, Arline’s disclaimer

was used as an estate planning tool. 14 The disclaimer was executed



13.      The Estate also argues that Arline’s disclaimer was valid. We only note that
         the disclaimer was executed by Arline’s son, who was her attorney-in-fact, the
         personal representative of Eugene’s estate, and a beneficiary under the will
         who would take substantially more if the disclaimer he executed was valid.
         Because we determine that the guardian ad litem’s motion to revoke the
         disclaimer should have been granted, we do not reach the question
         concerning the validity of such a disclaimer.

14.      The circuit court disagreed, reasoning:

                                                               (continued . . .)
                                           -15-
#26512

contemporaneously with Eugene’s will in an attempt to obtain Medicaid benefits

while simultaneously transferring the value of Arline’s elective share to the

Shipmans’ son and grandchildren. The circuit court should have granted the

guardian ad litem’s motion to revoke the disclaimer.

[¶27.]         Reversed and remanded for Arline to obtain her elective share.

[¶28.]         GILBERTSON, Chief Justice, and KONENKAMP, SEVERSON, and

WILBUR, Justices, concur.




________________________
(. . . continued)
               This disclaimer was not done as an estate planning tool, but was
               done to help Eugene preserve his assets because he assumed
               that he would be the surviving spouse, and he assumed he
               would need the assets to provide for his own daily needs.

         But at the time the disclaimer and will were executed, they did nothing to
         provide for Eugene’s daily needs while he was alive. They were used to
         preserve his son’s and grandchildren’s future inheritance, the very essence of
         estate planning. David, Arline’s attorney-in-fact, admitted that the
         disclaimer was executed because “Dad had spent down Mom’s share of the
         money that was to be spent down for Social Services, and that was his—
         trying to get his wishes that the kids would get something; that we did that
         so—to try to protect what was left.”

                                           -16-
