estate recovery: how to protect your assets from a reimbursement claim of the state
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ESTATE RECOVERY: HOW TO PROTECT YOURSELF FROM A REIMBURSEMENT CLAIM OF THE STATE OF MICHIGAN
P. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]
Background• Attorney and Partner at Cunningham
Dalman, P.C.• Have a Masters in Tax (MST), CFP®
and specialize in estates/elder law and business planning
Serving the Holland area since 1900
Background• Cunningham Dalman, P.C. has been serving
the lakeshore since 1900• We have 15 attorneys specializing in all
areas of the law
Serving the Holland area since 1900
Overview• What is estate recovery and why is it
important• What types of assets does estate
recovery apply to• When does it apply and what does the
process look like
Serving the Holland area since 1900
Overview• How do you protect your assets against it• What options do you have if it does
impact you• Some other things to be concerned about
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What is estate recovery?• It is a process that the State of
Michigan gets reimbursed for the Medicaid services it has paid for
• It does not put a lien (i.e. a Medicaid lien) on your exempt assets during your life or force a sale
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What is estate recovery?• It applies to people age 55 years or
older who have received Medicaid (i.e. long term care) services
• Covers Medicaid services back to September 30, 2007
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What assets does estate recover apply to?
• It only applies to assets that have to be probated
• That has the potential to include all assets (house, bank accounts, investments, vehicle, personal property, etc.)
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What assets does estate recover apply to?
• But…the only assets that are typically left are: bank account, personal property (including vehicle), and your house
• The house will be the most significant asset, but do not loose sight of the others
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What does the estate recovery process look like?
• A family member will receive an estate recovery questionnaire when the Medicaid recipient passes
• The form indicates that it needs to be completed in two weeks
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What does the estate recovery process look like?
• It is not clear what happens next…• If you have a basis to claim a
“hardship waiver,” you need to request that form
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How do you protect against estate recovery?
• The most effective way to protect your house is with a “ladybird deed” because it avoids probate
• There is an attempt to change this so you should consider doing it now if it is “grandfathered”
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How do you protect against estate recovery?
• This deed has other benefits• The house remains an exempt asset
during the Medicaid recipient’s life• By having the house avoid probate,
those costs and that hassle are also avoided
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How do you protect against estate recovery?
• What about other assets besides the house
• You should make sure they avoid probate (i.e. having your trust named as owner, naming a beneficiary, etc.)
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What options do you have if estate recovery impacts you?
• There might be an exemption• There is an exemption for a Medicaid
recipient’s spouse• An exemption applies if there is a child
who is under 21 years old and is living in the house
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What options do you have if estate recovery impacts you?
• An exemption applies if there is a child who is blind or permanently disabled and is living in the house
• Another exemption covers someone who cared for the Medicaid recipient for two years and this delayed Medicaid
Serving the Holland area since 1900
What options do you have if estate recovery impacts you?
• An exemption applies to a Medicaid recipient’s sibling who has an ownership interest in the house and lived there at least one year before the person was admitted to the nursing home
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What options do you have if estate recovery impacts you?
• You might be able to obtain a “hardship waiver”
• This applies to farm or business property
• It also covers a house of “modest value”
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What options do you have if estate recovery impacts you?
• This is defined as a house that is less than 50% of the average value of homes in the county the person lived in
• It is not clear how this will be applied
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Some other things to be concerned about
• When a single person is on Medicaid, he or she can keep the house
• However, he or she will not be able to use Social Security and other income to pay the house expenses
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Some other things to be concerned about
• This typically means that a child or beneficiary must pay these expenses
• You should protect your right to be reimbursed by executing and recording a mortgage against the house
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Some other things to be concerned about
• This gives your reimbursement claim higher priority than the State of Michigan’s estate recovery right
• You will get paid when the house sells
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Some other things to be concerned about
• You should make sure the Medicaid recipient has signed a financial (also known as a general durable) power of attorney
• That way, the agent can execute the mortgage
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This is subject to change so you have to stay informed…
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Questions……
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Thank YouP. Haans Mulder, JD, MST, CFP®Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]@holland-law.comwww.holland-law.com
Serving the Holland area since 1900