We are increasingly seeing a situation that generally follows this pattern:
1. After Dad dies, Mom creates a beneficiary deed transferring her home to her children equally on her death. Let’s say this happened in 2003.
2. In September, 2009, Mom goes into the nursing home and immediately qualified for Medicaid coverage (technically “HealthNet” in Missouri).
3. Mom dies in March, 2010.
4. The children decide to keep the house and rent it.
5. In March, 2011, just before the one year anniversary of Mom’s death a lawsuit arrives from the State of Missouri demanding that an estate be opened and the property sold in order to repay the Medicaid moneys expended.
Can they do this? Absolutely! The house is essentially transferred into the Probate Estate, sold, the state gets paid their entire amount of their claim (assuming the value of the house is enough to do that), and the kids get what’s left over. There will be money spent on costs and Attorney’s fees as well.
So, what can/should you do?
If Mom is on Medicaid you should check with the state shortly after death and “deal with it”. This is usually easier than waiting and hoping they miss you. They probably won’t. Depending on your situation can choose to simply pay the amount of the claim, or sell the house on your own terms and then pay them.
If you find yourself in this situation you can often “take charge” of the estate. This may give you some minor benefit as opposed to allowing the State to administer. The situation isn’t good, but you can often salvage something by being proactive.
Questions? Email us!