When handling an estate, there are a number of parties who have an interest in the estate. Obviously, the named beneficiaries are interested in receiving what has been left to them. However, creditors also have an interest, particularly those who provided your final care. One, in particular, Medicaid, is often in the mix when an individual is old enough and has received long term care funded, at least in part, by Medicaid. In some cases, there is even the option of recovering for hospital and drug benefits as well. As part of signing up for Medicaid, you agree to estate recovery, including Medicaid’s ability to reach into non-probate assets.
Bars to Recovery
There are a number of reasons that Medicaid will not collect from an estate, generally, because collecting will create an undue hardship on surviving beneficiaries, specifically a surviving spouse, a child under 21, or a blind or disabled child. This really only stops the immediate recovery. The state can recover from the spouses’ estate once they have passed away if there are no other bars to recovery in place. Family can also file an undue hardship waiver with Medicaid to try and prevent Medicaid from placing a lien on the house.
Expanded Recovery
There are a number of common estate-planning devices people use to pass property outside of the probate process. This has a number of advantages, not the least of which is the speed of transfer. But Medicaid can reach into this expanded estate to recover funds. Medicaid can reach into jointly-held accounts, living trusts, and assets held as a life estate. Medicaid can also place liens against real property. This doesn’t prevent the heirs from selling the property, but once it’s sold, a portion of the proceeds (and maybe all of the proceeds depending on the size of the lien) goes to settle with Medicaid.
Planning for Elder Care
If Medicaid is part of your long-term care plan, there are numerous steps you can take now to protect your home and those you love. This may include entering into long term care agreements with the children who will be providing your care, ensuring your house is correctly titled such that your spouse or child assumes ownership. Homes are particularly an issue with Medicaid estate planning because they are often the only asset remaining in an estate after other creditors have gotten their share. Homes, or a portion of them, are often exempt from other creditors, but not from the state.
At Dunn Law Firm, we strive to make sure your estate plan is comprehensive and includes all the details necessary to protect your home, assets, and those you love. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 to set up a free consultation today.
