Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Thursday, August 11, 2011

Third Circuit Holds that Promissory Notes May Count as Available Resources in N.J.

Promissory notesA number of New Jersey residents received promissory notes after loaning money to close relatives. After applying for Medicaid, the state denied the residents’ applications, stating that the promissory notes qualified as available resources because they were trust-like instruments. The residents sued in federal district court, and the district court denied the resident’s request for preliminary injunction.

The residents appealed to the U.S. Court of Appeals for the Third Circuit. The appellate court vacated and remanded the case, finding that the lower court committed legal when it found the promissory notes were trust-like devices before it determined whether the notes counted as resources under the regular SSI resource-counting rules. The district court denied the preliminary injunction again, finding that the loans were not bona fide cash loans or promissory notes. The residents appealed again.

In Sable v. Velez (U.S. Ct. App., 3rd Cir., No. 10-4647. 2011), the U.S. Court of Appeals for the Third Circuit held that the residents were not entitled to preliminary injunction because they “failed to show that it was more likely than not that their notes would be considered cash loans or promissory notes under regular SSI resource-counting rules or that their notes should not be considered trust-like devices.”

See Third Circuit Affirms That N.J. May Count Promissory Notes As Available Resources, Elder Law Answers, Aug. 1, 2011.

https://lawprofessors.typepad.com/trusts_estates_prof/2011/08/third-circuit-holds-that-promissory-notes-may-count-as-available-resources-in-nj.html

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