A couple days ago Barron’s Market Watch had a very interesting article about Medicaid Estate Recovery titled “Yes, the government can take your home after a Medicaid recipient dies. Here’s how to protect yourself.” You can read a pdf of the story here.
What should you do when you receive the Michigan Estate Recovery Questionnaire from the Michigan Department of Health and Human Services? Nothing. In a nutshell here is why.
You have no legal duty to reply. However, if you inquire about the claim, you will likely be shocked by its size, which often runs into the hundreds of thousands of dollars. If you choose to do nothing, the state will also do nothing. Why? The answer lies in the history of Michigan’s Estate Recovery program.
Estate recovery in Michigan was enacted in 2007 after the federal government threatened to terminate payments for long-term care. The legislature did not want to pass a law that took the homes and other property of tax-paying, law-abiding citizens. As a result, it enacted the weakest recovery program it could, limiting estate recovery to assets going through probate after the death of a long-term care benefit recipient.
If you wait three years before opening a probate estate, you do not have to notify the State of Michigan. Think of it this way: if a creditor, such as the State of Michigan, does not start probate within three years of a person’s death, that creditor has “slept on its rights” (failed to act in time). After three years pass, you can open a probate estate without informing the state. You can then transfer the property just as your loved one wanted.
What are your risks? A home is a prime example. If the owner dies, a standard homeowner’s insurance policy no longer covers the house. However, renter’s insurance might still cover the items inside. If you are willing to take that risk, read on.
We suggest you consult with an experienced Elder Law attorney to review your options. You may call us at 248-356-3500 for a referral.
All the best to you,
Jim