December 2007 "What Happens To A Medicaid Recipient’s Home After Death?"
PLANNING FOR WEALTH & SECURITY
By attorneys Jennifer & Jeff Hawkins
What Happens To A Medicaid Recipient’s Home After Death?
Indiana law permits Medicaid to file a lien against a Medicaid recipient’s home. The law also permits Medicaid to file a claim in a deceased person’s estate to recover money that Medicaid paid to the nursing home on behalf of the deceased person. Representatives of Indiana’s Medicaid system are using these laws in various parts of Indiana to recover assets for Medicaid.
A Medicaid lien permits Indiana to force real estate to be sold after the Medicaid recipient dies to reimburse Medicaid for money that it has spent on the recipient’s nursing home care. Alternatively, if the Medicaid recipient’s family tries to sell real estate that has such a lien imposed upon the real estate, the lien can prevent the family from recovering the money from the sale until Medicaid’s lien has been fully satisfied.
Indiana’s Medicaid estate recovery system enables Medicaid to file a claim for reimbursement in a deceased Medicaid recipient’s probate estate. The Medicaid claim is a high priority claim that gets paid before funeral expenses and distributions to family members. About the only expenses that get paid ahead of the Medicaid claim are the expenses of administration, such as the attorney’s fees, executor’s fees, and other administrative expenses.
So what should you do if your family member dies in the nursing home after receiving Medicaid benefits for a period of time? The answer depends upon whether the Medicaid recipient had any valuable assets remaining at the time of death and how long Medicaid paid benefits to the nursing home. Generally speaking, very few Medicaid recipients retain sufficient assets to pay the Medicaid claim and leave any assets remaining to be distributed to their families. In any case, it will be important to meet with an attorney to evaluate the matter.
Sometimes the real estate is valuable enough to the family to preserve and protect it in some way. In such cases, the family may want to open an estate for the deceased person to enable one or more family members to purchase the real estate. The estate’s personal representative (a catchall term for executor or administrator) and his or her attorney can recover fees for their services from the real estate sale proceeds. If the remaining proceeds are sufficiently valuable to pay the Medicaid claim completely, then Medicaid can be paid off and the remaining proceeds can be distributed to the family. More often, however, the proceeds will be insufficient to pay Medicaid’s claim, so the proceeds will be paid to partially satisfy Medicaid’s claim and no remaining funds will be left to distribute to the family.
It is very important not to take any steps regarding the administration of a deceased Medicaid recipient’s estate without first consulting an attorney. Some of our clients have sought advice from Medicaid caseworkers about what to do in these circumstances. Caseworkers are not supposed to give legal advice, but they are human and they will sometimes express their opinions. Usually, caseworkers understand the law pertaining to their cases very well and their opinions are well founded. However, most case workers have no understanding of the laws concerning decedent’s estates and their advice can cause much more harm than good. Following the advice of anyone other than an experienced estate administration attorney can expose you to mountains of unnecessary personal liability and stress. Oddly enough, the best advice in such situations is sometimes to do absolutely nothing and let the real estate languish. It sounds wasteful and irresponsible, but inaction can avoid a lot of stress, worry, and sleepless nights.
THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.
© 2007 by HAWKINS LAW PC, Estate, Trust & Business Attorneys. All rights reserved.