State v. Hammans

Nicholas Hammans was in an automobile accident in December 1994. He sustained a traumatic brain injury, causing him to be totally disabled and require 24-hour care. He was discharged from the hospital in March 1995 to the care of his parents (the Hammanses) (defendants), who received training to perform his physical therapy, deliver his medications intravenously or via injection, feed him through a feeding tube, change his tracheotomy tube, suction phlegm, and provide respiratory therapy. The Hammanses brought a lawsuit on Nicholas’s behalf arising out of the accident, and the proceeds were placed in a guardianship estate that the trial court supervised. The trial court then established the Nicholas W. Hammans Disability Trust (trust) and appointed the Hammanses as co-trustees, funding it with $200,000 transferred from the guardianship estate. The trust’s purpose was to allow Nicholas to remain eligible for Medicaid. In order to qualify for Medicaid in Indiana, an applicant had to meet both an income eligibility test and a resources eligibility test. If either was too high, the applicant would not qualify. Paragraph 4(c) of the trust directed the trustees to arrange for Nicholas to have services to enhance his quality of life to the greatest extent possible, and paragraph 4(c)(7) authorized expenditures for family members who provided special care or supervision to the extent of the reasonable services provided. Paragraph 4(d)(6) granted the Hammanses all the powers set forth in Indiana Code § 30-4-3-3, which authorized trustees to perform every act necessary for the purpose of the trust. On December 7, 2005, Nicholas died. The trust had a balance of $143,860. The State of Indiana (plaintiff) had paid $355,632.15 for Nicholas’s medical care through Medicaid. The Hammanses filed a verified petition seeking fees associated with the trust administration and compensation for the care they provided. The trial court issued an order authorizing payment of $140,000 to the Hammanses for their services, leaving only $1,360 in the trust for reimbursement to the state, plus attorney’s fees. The state appealed, challenging the trial court’s award of the bulk of the trust corpus to the Hammanses for co-trustee fees and for personal services they provided.