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Legal

2001-11-01 11:57:00

What’s going to happen?

Question: The article in a recent issue of The Q & A Times… 'Estate Recovery'… was very informative. My sister and I own farm ground together from an inheritance. The farm ground provides some income to us. Her interest in the farm is the only asset of any value that she had. My sister has become ill and several weeks ago she deeded her share over to her children to get on Medicaid. My sister is a 54 year old widow, and is not eligible for Medicare. After her death, will the state try to recover her Medicaid expenses? Could the state contend fraudulent intent? Can the state come after her children and me?

Answer:   For the benefit of everyone reading this let's begin by defining some terms and concepts that you have referred to.  "Medicaid" is the program administered by the State of Kansas through which the State pays the medical bills of eligible persons that cannot afford medical care.  If a person's income exceeds a certain amount that person is not eligible; this is referred to as the "Income Test".  Or, if the person owns property with a value over a certain amount that person is not eligible until the property has been "spent down" by paying medical or other necessary bills; this is called the "Resource Test".Since your sister's only valuable asset is her share of the farm ground, she apparently has reasoned that if she gives the farm to her children she will have no income or assets and, therefore will be eligible for free medical care from Medicaid.  As a general rule, taking the course of action your sister took is not wise.  In her particular situation, though, her actions may prove to be okay.Medicaid eligibility rules are complicated, and it seems, for every rule there are several exceptions.  In this case farm ground is an exception from the "Resource Test".  Therefore, your sister could have kept the farm ground and would still have been eligible for Medicaid benefits.Another concern you have raised is what happens after your sister passes away if she has received Medicaid benefits.  If she should die, can the State of Kansas take the property back or try to recover back the Medicaid benefits?  In this particular situation it appears there is no ability to make such a recovery.  Generally, the State has a right to recover Medicaid payments from the estate of the Medicaid recipient if there is property in an estate.  (There are a number of exceptions to this general rule.)  Also, the State can void certain transfers of property made prior to death by the Medicaid recipient if the transfer was without adequate consideration.  When a transfer is voided, the property is brought back into the estate so that Medicaid can make a claim to it.  Fortunately, your sister is not yet a Medicaid recipient and the law infers that a transfer such as your sister made, that is before she goes on Medicaid, is not voidable and cannot be brought back into the Medicaid recipient's estate.  The caveat to all of this is that the law in this area is still evolving and it cannot be said with 100% accuracy what the courts will do in any given situation.  In summary, since the property your sister transferred is farm property the transfer will not affect her ability to receive Medicaid benefits.  Because the transfer was made before your sister has applied for Medicaid, it would appear the State will not have a right to try to recover Medicaid benefits from  your sister's estate, or to void the transfer of the farm property.  There would be no basis for the State to come after either you or your sister's children.  This is a complicated area of law.  Without question, anyone contemplating "Medicaid planning" should seek professional advice.