Estate Recovery

Question (by mail): My mother died after nearly four years in a nursing home. She ran out of money after seven months and received Medicaid for the past three years. A month before she died, my brother was killed in an accident and left my mother nearly $50,000. My mother was also the beneficiary of one of his life insurance policies ($35,000). When we opened my mother's estate, the state Medicaid agency made a claim for three years of Medicaid payments -- more than $40,000. If my brother hadn't died with an old will and hadn't forgotten to change the beneficiary on his life insurance, the state would not have gotten anything. It doesn't seem fair that a windfall to my mother should be taken from her family. Is there anything we can do?

Answer: Maybe. The claim made by the state against your mother's estate is under what is called "estate recovery" -- meaning that at the death of a Medicaid recipient, the state is required to recover funds expended from remaining probate assets -- generally the home. Even if your mother had not died, in all probability she would have been disqualified from receiving further Medicaid benefits and would have been required to spend down her inheritance. What can you do? Although you might argue that the state should be entitled only to the amount of Medicaid paid on behalf of your mother from the time of your brother's death until her death, we don't hold much hope that you would be successful. That's why it's a good idea for family members to review their wills and beneficiary designations and to either exclude incapacitated family members or create special needs trusts for them. There are elder law attorneys throughout the United States who can help you through the planning process.

© 1997, Flying Solo®