By: Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho
Maybe. The Idaho Supreme Court recently held that a “remainder” interest in a home in which a deceased Medicaid recipient had reserved a “life estate” was subject to recovery. What does that really mean?
Melvin Peterson gifted his house to his daughter in 2001. At that time he reserved a “life estate” for himself so he could continue to live in the house and to lower his property taxes. His daughter received a “remainder” interest in the house, meaning she would get the house when he died. There are tables in the Medicaid regulations to identify the actual dollar value for the “life estate” and the dollar value for the “remainder” interest. A few years later, he applied for Medicaid to help pay his nursing home bills. Mr. Peterson died in 2007 and by then Medicaid had paid over $100,000 for his care.
Upon the death of someone over age 55 receiving Medicaid benefits, the State Medicaid program is entitled to be reimbursed out of the Medicaid recipient’s assets for the cost of their care. All Mr. Peterson owned at his death was the “life estate” interest in the house.
The Idaho Supreme Court held “When assets of a Medicaid recipient are conveyed to a survivor, heir or assign by the termination of a life estate, the assets remain part of the recipient’s estate…” The Court also stated the “remainder” interest in the house was an asset owned by Mr. Peterson, and the entire value of the house, (both the “life estate” and “remainder” interest), is available to reimburse the State for Medicaid benefits paid on his behalf.
This is a major shift in the law, and at a minimum has the potential to create problems with the sale of remainder interests in real property.
Stay tuned. A request has been made to the Court to reconsider this decision.