Definition of “Estate” Expanded for Medicaid Recovery Purposes

*By: Anthony J. Enea, Esq.

As part of the recommendations made by the Medicaid Redesign Team appointed by Governor Cuomo, the New York Legislation recently amended §360-7.11 (b) of NYCRR by adding new paragraphs (7), (8) and (9) effective April 1, 2011, subject to the promulgation of regulations by the Department of Health (DOH). As of the writing of this article the proposed regulations had not yet been enacted. Under prior law the definition of “estate” for purposes of recovery for Medicaid benefits paid was limited to recovery against all real and personal property and any other assets owned by the Medicaid recipient at the time of his death which passed pursuant to the terms of a valid Last Will and Testament or by intestacy. In essence, under prior law Medicaid’s ability to recover for Medicaid was limited to the probate and intestate assets owned by the recipient. Non probate or non-intestate assets such as those held in joint accounts, in trust for accounts, or life insurance policies which have named beneficiaries (other than one’s estate), revocable and/or irrevocable trust assets, were not assets against which Medicaid’s claims or liens attached to.

Subject to the implementation of regulations by the DOH, the newly enacted §360-7.11(b)(7) of 18NYCRR expands the definition of “estate” to include any property in which the individual has any legal title or beneficial interest at the time of death, including jointly held property, retained life estates and beneficial interest in a trust to the extent of such beneficial interest. However, the claim against the recipient of such property received by descent, distribution or survival shall be limited to the value of the property received by the recipient and in no events can it be greater than the Medicaid benefits otherwise recoverable.

Clearly, the potential expansion of the definition of “estate” to non probate and non-intestate assets, particularly trusts, jointly held property and retained life estates, posses a potentially significant large problem for the elder law planners. Additionally, the inherent ambiguity of such phrases as “beneficial interests” posed further complexities.