Government Intervening in a Will

by Michael Butler

Although a will sets out how the deceased wants his property distributed to his heirs, it is not necessarily the final word on the matter. Creditors and taxes must be paid. If the deceased received certain types of Medicaid benefits during his lifetime, especially long-term care benefits, the state government will intervene in the will to recover the money.

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Federal Requirement

Nursing home care is exceedingly expensive. Most individuals cannot afford it on their own so the Medicaid program pays for their care. As a condition of receiving the funds, the federal government requires that the states have Medicaid Estate Recovery Programs. The exact programs are different in every state. Some states exempt certain types of property. States also often have a total value of the estate threshold below which they will not collect. States normally have protection laws that the state they will not remove a spouse or adult child living in the home. However, a lien might be placed against the property so that the person living there cannot sell it without giving the state its share.

Problems

The deceased's heirs can often pay the state any money owed to avoid estate recovery. However, because of the expense of long-term care, this is often not an option. When the heirs cannot afford to pay, property that has been in the family for generations can be lost, even property of great value. For example, if the only thing a person has left of value is the family farm that is worth more than what is owed to the state, the entire farm might be sold so the state can recover its money.

Avoidance

A well-planned estate can often avoid estate recovery. If a person dies without an estate, then there is nothing on which the state can recover. However, you must plan for this years before the need for Medicaid arises. Different states have different time periods before which assets must be transferred or be considered fraudulent transfers. Generally, you can't transfer your property to someone else for less than market value shortly before the need for long-term care arises. The state will often claim the transfer is fraudulent and refuse to pay for care until the difference in funds is made up. Because of this, you should speak to an attorney in your state long before you might need long-term care. Since the need for long-term care often arises unexpectedly, it may not always be possible to avoid estate recovery.

Other Intervention

The executor or personal representative of an estate has a duty to file any taxes and pay any money owed out of the assets of the estate. Although this is not direct intervention, if the taxes aren't paid, the government will intervene to recover the money. Some states also have estate recovery programs for other types of government benefits, such as state social services and mental health programs, that work similarly to the Medicaid recovery programs.