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Suffolk County, NY Estate Planning and Elder Law Blog

Tuesday, April 03, 2012

Life Estate Update 2012

My mother transferred her home to me in 2002 and retained a “life estate”.  Someone told me that Medicaid can make a claim against the property when she dies.  Is that true? 

The Medicaid program has always been able seek payback from the probate estate of Medicaid recipient.  For that reason, many clients transferred their homes to their children and retained a “life estate.”  Upon their death, the real property passed to their children without probate.  Thus, Medicaid could not recover against that asset as it was not part of the Probate Estate. Furthermore, the Medicaid program can only collect up to the amount of benefits that the individual received. 

One year ago, the New York State Budget was passed with a provision for an expanded definition of “estate recovery.” This meant that Medicaid could seek recovery against any asset in which the recipient held an ownership interest in at the time of their death.  The expanded definition included interests in joint tenancy, tenancy in common, survivorship and life estate interests.  In particular, this was a disappointment for many people who retained life estates in their homes with the belief that the real property would be fully protected for their heirs.  The only favorable portion of the change was the new way of valuing life estate interests.  The new method of calculating the value of a life estate results in a much lower value, which means less to be collected by Medicaid. 

However, this week the Governor passed a new budget which repealed the law expanding the definition of “estate.”  The state of the law regarding life estate interests will be restored to its original form which will allow a life estate to pass to remaindermen upon the death of a Medicaid recipient.  There will be no reimbursement to Medicaid. 

In addition to the repeal of expanded estate recovery, there was concern that the new budget would eliminate spousal refusal in Community Medicaid cases where the recipient is living in their home with their spouse and receiving services.  It has always been the law in New York State that the “community spouse,” or the spouse not receiving Medicaid services, could claim that they are unable to contribute funds to the care of their spouse because they need the money for their own support.  This is especially important on Long Island, where the cost of living is high.  We are happy to say that with the passing of the new budget, spousal refusal is still alive and well in New York State.

 

By Nancy Burner, Esq. and Britt Burner, Esq.


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© 2014 Nancy Burner & Associates, P.C.
12 Research Way, East Setauket, NY 11733 | Phone:631-941-3434
82 Main St., Westhampton Beach, NY 11978 | Phone: 631-288-5612
1115 Broadway , Suite 1100, New York, NY 10010 | Phone: 631-941-3434

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