Full question:
My Mother and I shared a joint savings account for years, then when she went to a nursing home in February of 2010 I also became her payee for her Soc.Sec. retirement income which was automatically deposited in her checking account. After her death on 7/7/2010 medicaid stated that they are going to claim all her assets in both accounts (7500.00). What recourse do I have?
- Category: Medicaid
- Date:
- State: New York
Answer:
The answer will depend in part on whether the accounts were owned as joint owners with a right of survivorship, or named a beneficiary. Property owned jointly with right of survivorship passes automatically to the surviving owner outside of probate. Property that transfers on death to a named beneficiary also transfers outside the probate process.
Please see the following text at the link below:
http://www.seniorlaw.com/homestead-medicaid.htm
“For purposes of New York Medicaid estate recovery, an "estate" only includes property passing under a will or by intestacy, and does not extend to assets passing outside a will or intestacy to a joint owner with right of survivorship, or to a designated beneficiary of a bank account, life insurance policy, lifetime trust, or other nonprobate asset. Exempt resources, including the homestead, should be kept out of the recipient's probate estate to avoid a Medicaid estate recovery. Medicaid estate recovery against a recipient is usually only an issue if the recipient had exempt resources such as a homestead. As stated above, if the Medicaid was otherwise correctly paid, estate recovery in New York is limited to property passing under a valid will or by intestacy and does not include property passing by operation of law such as a trust, or property jointly held with right of survivorship.
No adjustment or recovery against an estate (or on a lien) may be made until after the death of a surviving spouse and only when there is no surviving minor, blind, or disabled child. N.Y. Soc. Serv. Law § 366(2)(b)(ii).
There are also provisions for waiver of estate recovery if there is undue hardship. The State Medicaid Manual contains HCFA's interpretation of "undue hardship." State Medicaid Manual § 3810. The State may, but is not required to, give special consideration where the estate is the sole income producing asset of the survivors (such as a family farm or business with limited income), is a homestead of modest value, or there are other compelling circumstances. State Medicaid Manual § 3810(c). In addition, the Manual authorizes states to reject undue hardship claims if estate planning strategies were used to divest assets in order to avoid estate recovery or the hardship claimed is the inability of a beneficiary to maintain a pre-existing lifestyle.
Regulations proposed by the New York Department of Health state that undue hardship may be present where the estate consists of a family farm or business or other compelling circumstances determined on a case by case basis. In re Cox, 687 N.Y.S.2d 594, 595 (Sur. Ct. Cattaraugus County 1999). The Department of Health has indicated that a waiver may be approved if the estate consists of a family home of modest value and that local Medicaid agencies are obligated to consider claims of undue hardship although regulations have not yet been enacted. In re Cox 687 N.Y.S.2d 594, 595 (Sur. Ct. Cattaraugus County 1999).
Caution should be taken not to confuse these estate recovery rules with the recovery rights against the estate of a legally responsible spouse. The New York Court of Appeals has analyzed the right of recovery against the estate of a spouse of a Medicaid recipient. In Estate of Craig , 82 N.Y.2d 388, 604 N.Y.S.2d 908 (1993), recovery was denied against the estate of the surviving spouse because the surviving spouse did not have sufficient income and resources to pay for her husband's medical services at the time the expenses were incurred. Without the ability to pay, the court held that the spouse was not a legally responsible relative under New York Social Services Law Section 363(3)(a). Not having sufficient income is generally considered to have no more than the Community Spouse Resource Allowance and exempt resources such as a homestead.”
A deceased's debts should be paid with the property in their estate (the property left at their death). Children don't inherit their parent's debts unless they created a co-signor/guarantor/surety/joint account relationship to the debt, so that the child's name is on the debt also, and it isn't a separate debt. Spouses will generally only be liable for a separate debt of the deceased if they live in a community property state. However, state laws vary about which marriage partner is responsible for certain debts depending upon when the debt was incurred, the identity of the debtor, or the purpose of the debt.
Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will. Be advised that when a child inherits property that is collateral for a debt -- for example, a car that is not paid for or a house with a mortgage -- the debt comes with the property. If there is insufficient money or assets to pay all creditors, then the estate must be divided up as equally as possible, with secured creditors receiving priority. This means that if the deceased parent died with little or no money in their accounts and didn't own a home, unsecured debt, such as credit card debt will not be paid to the creditors.
One of the duties of the executor or administrator of an estate is to make sure that the debts of the decedent have been paid. Because an executor or administrator can be personally liable for mistakes, they will often not pay debts from an insolvent estate without court approval (which protects them from personal liability). the executor or administrator is not responsible for the payment of any costs or debts of the estate unless the executor or administrator makes a mistake. For example, if an executor were to distribute money to a beneficiary and then discover that there were more debts to pay, the executor might have to pay the debt out of the executor's own pocket (unless the executor can recover the money from the beneficiary).
If the assets of the estate are not sufficient to pay all of the debts state statues provide for the priority of payment. For example, in one state the costs are paid as follows:
the costs of administration (i.e., filing fees, legal fees, accounting fees, and the compensation of the executor or administrator).
the family exemption (a payment to the surviving spouse, or children or parents of the decedent residing in the same household with the decedent, of cash or property with a value of $3,500).
the costs of funeral and burial, and for medicines and medical care within six months of death, and for services by any employees within six months of death.
the cost of a gravemarker.
Rent owed for the decedent's residence for the last six months before death.
All other debts and claims.
Claims of the federal government for assistance owed may have priority over other debts because of liens created by federal law. If all of the costs and debts having priority have been paid, and there is not enough money to pay the remaining debts (the last category), then the debts are paid proportionately from the remaining funds, each creditor getting the same percentage of the debt (e.g., the remaining debts might be paid 15 cents for each dollar of debt).
Because an executor or administrator can be personally liable for mistakes, they will often not pay debts from an insolvent estate without court approval (which protects them from personal liability). Distributions to beneficiaries without court approval are called "at risk" distributions, because the executor or administrator is making the distributions with the risk of liability if there are more debts
The creditors of a decedent can usually reach only the assets of the decedent, and there are certain types of assets that are exempt from the claims of creditors or are not considered to be part of the estate.
Congress included a provision in the Omnibus Budget Reconciliation Act of 1993 (OBRA ‘93) that required states to implement a Medicaid estate recovery program. OBRA ‘93 requires states to recover, at a minimum, all property and assets that pass from a deceased person to his or her heirs under state probate law, which governs both property conveyed by will and property of persons who die intestate. A state’s ability to recover from probate estates depends partly on Medicaid’s standing in relation to other claimants. The order of payment of debt is established under state law. Mortgages, unpaid tax or public utility bills, child support arrears, burial costs, or other debts may be paid before the Medicaid lien and reduce the amount that is actually recovered. Some state laws protect the family home in an estate from some or all claims against it, including Medicaid claims.
See also:
http://aspe.hhs.gov/daltcp/reports/estaterec.htm
http://www.health.state.ny.us/health_care/medicaid/publications/docs/adm/02adm-3.pdf
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
