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About the Case: Attorney Mignanelli successfully litigated this national landmark case which questioned whether the interest of a special needs adult who was a beneficiary in a trust created by his father, would cause him to be disqualified from benefits provided under the Rhode Island medical assistance program. The Supreme Court found for Mr. Chenot, the beneficiary of the Trust, holding that the language of the trust provided the Trustee with enough discretion as to the distribution of assets from the Trust so that Mr. Chenot did not hold any demand rights to the trust assets. As a result, the State of Rhode Island, through its Medicaid program, could not force the Trustee to distribute trust assets and in turn, claim that those distributions had to be used for the cost of Mr. Chenot’s care in a group home. This case set the “discretionary” standard rule for special needs trusts in Rhode Island which continues to be utilized today.

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About the Case: Attorney Mignanelli litigated the Rhode Island Supreme Court case, Pezza v. Pezza, which addressed a surviving spouse’s statutory life estate interest in their predeceased spouse’s real estate when that real estate was held in trust. This is an important decision in that the Supreme Court for the first time adopted the “illusory transfer test” rule analyzing whether a conveyance of real estate made by one spouse to a trust was a completed gift sufficient to divest the surviving spouse of his or her statutory right to a life estate in that real estate.

This case was ultimately decided in favor of the deceased spouse’s children whereby the Rhode Island Supreme Court stated that a completed gift of real estate, prior to the person’s death, defeats the surviving spouse’s life estate interest in that real estate.

As a result of this ruling, the Rhode Island legislature amended the law with respect to a surviving spouse’s life estate interest in a predeceased spouse’s real estate. The essence of the legislative change is that Rhode Island allows spouses to disinherit their surviving spouses.

[Cite as Pezza v. Pezza, 690 A.2d 345]

No. 94-244-Appeal.

Supreme Court of Rhode Island.

February 26, 1997.

Surviving spouse sought declaration of her rights in four parcels of real estate that her deceased husband had transferred prior to death into trust for benefit of his children by former marriage. The Superior Court, Providence County, Israel, J., found that trust was valid, and would not be declared invalid for purpose of satisfying surviving spouse's statutory survival interest in real property owned by husband at his death. Surviving spouse appealed. The Supreme Court, Bourcier, J., held, as a matter of first impression, that: (1) illusory transfer test was proper test to determine whether husband's inter vivos transfer of real property was sufficient to defeat surviving spouse's statutory share, and (2) husband's transfer of property to trust was real and complete, under illusory transfer test.

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1.) Estate tax currently affects decedent's estates that exceed a value of $675,000.

2.) The new law ultimately phases out the tax by the year 2010. The exemption amounts are as follows: