Saturday, February 2, 2008

Estate Recovery Law More Agressive Than Ever

Estate Recovery Law More Aggressive Than Ever

Your mother is in a nursing home and has qualified for Medicaid. She’s been able to keep her home because it is an exempt asset so long as she is living and “intends to return home.” But what happens to the house after she dies? What if it was your spouse on Medicaid and the state has paid thousands in benefits? Will they attempt to recover benefits upon your spouse’s death?

After a Medicaid recipient dies, the state has the right to recover any assets remaining in order to reimburse itself for Medicaid benefits paid out. This process is called estate recovery.

Certainly, it makes sense from a public policy standpoint----if the state is going to help pay for a resident’s care while they are living, then the state should be reimbursed, as fully as possible, by any assets remaining at the resident’s death. But while this policy may make sense, families are never happy to learn that the state may try and take your/your parent’s home after your spouse/parent dies.

At one time, my state of Texas for instance, was only pursuing certain real and personal property the Medicaid recipient had titled in their name, alone. But now, Texas is taking advantage of the Federal law’s expanded definition of “estate” that allows the state to recover most assets in which the Medicaid recipient has an ownership interest.

Fortunately, the state Medicaid Estate Recovery Program (MERP) does not have the authority to put a lien on property, but may file a claim in probate.

There are still, in certain circumstances, perfectly legal ways of avoiding estate recovery. For example, if mom is the Medicaid recipient, and she has a child with a qualifying disability, she may be able to give her home to that child penalty free and avoid estate recovery at her death.

Also, if mom had an unmarried child who moved into her home with her, cared for her for at least one year, then mom can transfer her home to that child, penalty free, and avoid estate recovery. This is called the caretaker/child exception.

There may also be other strategies to consider for avoiding estate recovery including purchase of the home by family members or, perhaps, even using a reverse mortgage.

Medicaid estate recovery rules are complicated. I MUST CAUTION YOU THAT THE RULES VARY SIGNIFICANTLY FROM STATE TO STATE. The examples I used here pertain to Texas, but your state may be more or less strict.

You should consult an Elder Law Attorney who practices in the area of Medicaid before drafting your estate plan with the intent of qualifying for Medicaid, with the hopes of avoiding estate recovery.

For more information, please visit us online at: http://www.williedasherlaw.com/

Or for more information on Alzheimer's, please visit the Alzheimer's Legal Resource Center at: http://www.alrconline.com

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