I recently lost my 95-year-old mom. She was on Medicaid in a nursing home. When she died, she had $12,000 in her bank checking account. This was allowed under Medicaid rules. Every month her check from the Veterans Administration was electronically issued to the account, and with a power of attorney, I would write a check to the nursing home for the full amount. I did this for almost seven years. Her Social Security check went directly to the nursing home. Her bank account was in trust for me. I presented her death certificate at the bank and closed the account. I was issued a check for the $12,000 balance. Will I be able to keep that $12,000, or will Medicaid want it now that she has passed away?
Medicaid has no claim on this money. It's yours.
True, Medicaid is legally entitled to assert a claim on a decedent's assets to recover benefits it paid during his or her lifetime. However, it can only make that claim against the decedent's probate estate — i.e., the assets that are governed by his or her will.
Assets with named beneficiaries — such as bank in-trust accounts, retirement accounts, and life insurance policies — aren't governed by the will. They pass directly to their named beneficiaries. Assets that are held jointly with right of survivorship are also outside the probate estate because they automatically go to their surviving joint owner.
And to answer a question that you didn't ask, the money you've inherited from your mother isn't taxable income to you.
The bottom line After someone dies, Medicaid can recoup benefits paid during her lifetime from her probate estate, which consists of all the assets governed by his or her will.
TO ASK THE EXPERT Send questions to Ask the Expert /Act 2, Newsday Newsroom, 235 Pinelawn Rd., Melville, NY 11747-4226, or email email@example.com. Include your name, address and phone number. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own advisers for your specific needs.