Clients often ask about “Remainder Interests,” and how they affect the Medicaid process. Can remainder interests be recovered by the Medicaid program after the death of a nursing home Medicaid recipient?
The answer depends upon the circumstances and upon the type of remainder interest involved. And there are a variety of interests under the law. For example, a child of a Medicaid recipient could be the remainderman under a life estate held by the Medicaid recipient/life tenant. These interests almost exclusively involve real estate, with a future interest in real property granted to another individual (often a child), while the grantor retains a possessory ownership interest during his life, with a natural termination of that interest at death. Any such interest must not contain any reversionary interest (a possibility of a return of the interest to the Medicaid recipient).
In each of these cases, the facts and circumstances of the Medicaid eligibility dictate the ability of the state agency to execute a state recovery on the vested remainder.
A major factor in whether or not any vested remainder or contingent remainder interest can be recovered by the state is whether or not the property interest must be processed through the probate court. If the remainder interest holder must open a probate matter in order to secure his or her present interest, in most cases the state will be allowed to make a claim on the estate in order to receive payment for any funds used on the Medicaid recipient’s behalf during his lifetime.
So, each circumstance is different when it comes to assessing the property rights of a vested remainder interest/transferee vis-a-vis the rights of the state to execute estate recovery against the new owner of the property. Many law firms are not aware of the way in which unique estate planning interests can affect the state’s rights against a Medicaid recipient. Property law is not the only consideration when it comes to Medicaid. In order to avoid any reversions to the state, one should include professionals that are fully well-versed in the Medicaid process, such as QMC.