Deceased Estates and Medicaid Claims
by
DECEASED ESTATES
About the Professor:
Dr. Donald J. Baranski, received his Bachelor of Arts in Humanities Pre Law, from Michigan State University. This was a triple major of American History, Philosophy, and Psychology. He then received a Master of Arts degree in Philosophy from Michigan State University. He then obtained his Juris Doctor from Michigan State University College of Law. Dr. Baranski has been a licensed Attorney and Counselor at Law in the State of Michigan since 1988, practicing probate law including Last Wills & Testaments, Trusts, Powers of Attorney, Guardianships, Conservatorships, and Deceased Estates in Michigan. Dr. Baranski has been teaching since 1989. He has taught at Western Michigan University Cooley Law School, Michigan State University College of Law, Jackson College, and the Eaton Rapids High School.
ABOUT THE PROBATE COURT
What is the Probate Court?
Probate Judges who are elected in non-partisan elections for six-year terms. Almost every county in Michigan has its own probate court.
What is probate litigation?
When a legal dispute arises in probate court, is it often referred to as “probate litigation.”
When a person dies, is the Probate Court always involved to transfer assets?
Not always. It depends on what type of assets the person left behind. The probate court’s involvement
is only necessary when the decedent leaves “probate assets,”meaning, property in the decedent’s
name alone.
Can a decision made by the probate court judge be appealed?
Yes. Parties in probate litigation have the right to appeal the decision within 21 days after entry of a final Order. Depending on the type of claim involved, the appeal will be directed to either the Circuit Court for the same county or to the Michigan Court of Appeals.
What is an “interested person”?
This is a term used in Probate Court which means a person who has an interest in the case, and who entitled to participate in the case if desired.
What happens if you die without a Will?
If you die without a Will, your probate assets are transferred under Michigan’s default “intestate” laws. Under Michigan’s intestate laws, the assets are distributed to your heirs under a formula that considers whether the decedent was married, had children, had a spouse with children, or had living parents.
ESTATE ADMINISTRATION
What is a Personal Representative?
It is the person appointed by the Court who administers the deceased person’s estate. The Personal
Representative is issued “Letters of Authority” by the Court which tells the world that this person has legal authority to manage the decedent’s assets. If the decedent left a Will, it is usually the person nominated in the Will to serve in this role.
What is the Personal Representative’s job?
The Personal Representative legally steps into the shoes of the decedent. The personal representative
needs to “marshal” the assets (collect and protect them), pay expenses (funeral bill, estate administration, medical bills, creditors, taxes, etc.), and then distribute what’s left. If the decedent left
a Will, then the remaining assets will transfer as stated by the Will. If the decedent did not leave a Will, then the remaining assets are distributed according to Michigan’s default “intestate” laws.
When a person dies, how do their creditors get paid?
By the decedent’s Estate or the decedent’s trust if revocable during life. A claim filed against the Estate is submitted to the Personal Representative, and a claim against the Trust is submitted to the trustee. There are specific time limits to when a claim can be asserted against an Estate or Trust, and failure to
do so could result in the creditor’s claim being barred.
Medicaid Estate Recovery
If I receive Medicaid while in a nursing home, can the State of Michigan take my house?
Under federal law, the States are required to seek recovery for Medicaid payments for nursing home services, home and community based services, and related hospital and prescription drug services from the estate of a deceased recipient who was age 55 years or older at the time of the services were received.
Michigan passed a law in 2007 which did not go into effect until May 23, 2011 effective retroactive to July 1, 2010.
Which assets are subject to estate recovery?
The federal law requires, “all real and personal property and other assets included within the individual’s estate, as defined by state law”. Assets held in a revocable trust and assets that pass upon death outside of the probate estate are not subject to estate recovery. Also, Medicaid may not charge interest on the estate recovery claims.
What are the priority of claims?
Michigan gives Medicaid claims lower priority to costs and expenses of administration of the estate, funeral and burial expenses, and statutory allowances.
Are there any times that Medicaid will not try to recover from my estate?
Medicaid will not ask for money if one of the following persons is living:
- Spouse
- A child under the age of 21 years of age.
- A child of any age who is blind or permanently and totally disabled.
Will Medicaid Defer or postpone collecting funds?
- A survivor who was residing in the home and providing care for a period of at least 2 years immediately before the date of the recipient’s admission to a medical institution, and that care allowed the recipient to live at the home rather than in an institution.
- A sibling who has an equity interest in the home who was residing in the home for a period of at least 1 year immediately before the recipient’s admission to a medical institution.
If none of the 5 situations apply to me, will Medicaid file a claims against my estate?
Medicaid will determine the estimated costs of recovery versus the estimated amount to be recovered. Also, to determine if there is a recovery if that would cause an undue hardship.
What is an Undue Hardship?
After an undue hardship application is filed, Medicaid may grant a hardship waiver when:
- The estate property is the primary income-producing asset of the beneficiaries, such as a family business or farm and the income produced by the asset is limited.
- The estate property is a home of modest value; or
- Recovery from a recipient’s estate would cause a survivor to become or remain eligible for Medicaid.
An applicant for an undue hardship must also satisfy a Means Test.
What is a Means Test?
The means test is applied to make sure an actual hardship would result if Medicaid recover is made. To pass the means test, an applicant must prove that:
- Their total household income is less than 200% of the poverty level; and
- Their total household resources are less than $10,000.
Can the Personal Representative charge a fee for his or her services?
Yes, a “reasonable” fee under Michigan law, unless the Will states otherwise. What is considered
“reasonable” is often a source of litigation, and there is no set figure or range which is recognized as reasonable. Rather, what is reasonable depends on the specific facts and the complexity of
administration. The Personal Representative’s reasonable fee is paid with Estate assets.
Can the Personal Representative retain an attorney to assist with administration?
Yes, under Michigan law, unless the Will states otherwise. Because the duties of a Personal representative are not intuitive and are complex, it is highly recommended that a Personal Representative retain counsel to assist with administrative. The Personal Representative’s reasonable attorneys’ fees are paid by the Estate.
Look at the Trust article as well.
