Estate recovery- has anyone had to deal with this after the death of a family member?

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3. Estate recovery aka MERP is required to be attempted by all states in some way. Who does it depends on the states. LA, like TX, uses an outside contractor who approach it very much like a debt collection co. But just how it runs & what can actually happen is very very interdependent on state property rights laws and probate laws. Some states do Tefra, which allow lien placed proactively and others are not. LA doesn’t as far as I’m aware. For non Tefra states, it’s a after death lein or a claim against the estate if you open probate.

Some are very pro property rights, FL & TX, as to how exclusions & exemptions are done. Like TX has a lot of things that can be deducted from the Medicaid tally. But heirs have to do what’s needed and if that doesn’t work out totally then you open probate and then how probate runs comes into play. Louisiana is very different than what any other state does as we follow French law rather than English law. Like the forced inheritance (now repealed as NeedHelp wrote) laws were unique to LA. Another thing we have is usufructs & my understanding is that if you have a usufruct on the house as per valid will, you cannot be forced to leave the place. Medicaid cannot make you, the executor can’t make you either. You can just stay at the house till you decide you don’t want to anymore (or the heirs make you an offer you really really like & with a bow on it). If you pay the utilities, this could be quite a long time.

I’m digressing, but LA laws tend to favor the family or as indicated as per the will UNLESS there is a secured creditor. Secured would be the bank that holds the mortgage, or SBA who had you place the property as collateral for their loan; secured lenders can require the property to be sold. Medicaid is a unsecured creditor. Medicaid in my understanding cannot force it to be sold.

But remember, the costs to keep the house exist & get added to each day. One thing to keep in mind for the future, is when mom dies the property taxes will increase. It could be huge as no homestead exemption. Could increase substantially. For Orleans & St Tammany & Plaq. it will triple. I think the for the river parishes not so much. The one good thing abt delinquent property taxes in LA is that it’s hard to ever actually acquire the property by tax sale. So you don’t have that worry (btw in MS it’s a 3 yr tax sale redemption & it transfers ownership).

If your goal is you want to keep the place, & you have the wallet & sense of humor to deal with stuff for years and have a reasonable expectation of having exemption, exclusions or claims, it can be done. I’d suggest that you just plan on opening probate & get a probate atty who understands MERP.

About your ? if the property is worth way way less that the Medicaid tally; it’s not your debt. Your not required to make up the difference.

LOL! I’m remembering Sgt. T Ben Boudreaux, morning traffic DJ in NOLA, had a client who loved him & insisted on listing in but was nails on a chalkboard to me.

But I digress, before you get in the weeds of worry on Estate recovery, I’d suggest that you very seriously look at the costs on having moms property as a first step if this makes sense to do. This is going to be a 3 part answer:
First, although mom is allowed to continue to own her home (with a valid homestead exemption) as an exempt asset for LTC Medicaid program while she is alive, Medicaid has a copay requirement. Copay is that basically all her monthly income less a small personal needs allowance ($60 a mo) MUST BECOME THE COPAY to the NH. So mom will have zero - nothing - ziltch of $ to realistically pay a penny on her old home from day 1 of Medicaid application to beyond the grave. Beyond the grave is because your going to have to deal with the house in some way even after she dies.... could be several months to work thru settling issues if you deal with MERP or years if you open probate.

Personally if there is still a mortgage, HELOC or any other lending on the place, I’d fold it and put it up for sale and just do a spend down from the $. Reason being is that having secured lending on it, like a mortgage, is going to require full insurance on the property. And that’s going to be costly especially as she has moved out so her old homeowners will not be valid anymore and that means getting a vacant dwelling policy which r expensive. If house is somewhere that needs NFIP or wind pool plus vacant dwelling, plus the monthly mortgage payment gonna be a lot of $. Sell it imo.

If it has a reverse mortgage on it, forget wasting time on even thinking about keeping it.

Now if it’s owned outright and has no NFIP or wind pool needed and its costs are minimal for utilities, yard & maintenance so it can kind be basically be empty till after she dies, that might make sense to do. You’d still have costs (property taxes, insurance, utilities etc.) to pay for an unknown period of time, but if there is a good probability that the heirs or the Executor (if probate opened) have exemptions or exclusions to estate recovery or their own claims for probate, could make sense. This still runs risk but if you have the wallet and ok on risk, go for it.

Keep in mind, you do NOT have a set end point, mom could live 6 months or 6 years. Imho if you do this, you have to, like have to, be able to see it thru to beyond the grave. Why? well if u stop like 14 months in as costs gets too whack, siblings flat do not do whatever they promised they would and your husband is beyond hearing another issue with the place, all that $ you spent on the house cannot be easily reimbursed to you from the sale of the home. It’s still moms house, so when it sells all the $ is hers. You’d need some sort of property management agreement to deal with this way ahead of spending a penny on the place or applying for Medicaid and that’s not a DIY to do; need to speak w/ atty that does real estate law.

2. Property occupancy, Medicaid is going to ask specific if property is empty. In theory if someone living there they need to be paying rent. Fair Market value rent. I’m in Orleans parish and FMV rent here is easily over 2k a mo for most non sketchy places which likely takes the owner past the monthly income threshold. Rent becomes income to the Medicaid applicant, aka your mom. And there’s tax stuff when you rent as well as insurance issues.

now if there is a dependent family member already living at the house, or a disabled family member, they can get grandfathered in to stay rent free. There is someone on this forum who had just this situation with a disabled nephew, I’llPM her as she has lots of good insight on how this ran.

Also if property is empty, some costs can be filed with MERP to be deducted from the Medicaid tally. But have to keep meticulous records.

on to next post..

It won't matter what the house is worth. They will be looking at the estate for the assets. Even if your parent owed, let's say, $100K - if the only asset is a $25K house, that's all there is to recover. The debt belongs to parent, not the child. In this case, they couldn't recover all of the blood from this particular turnip.

Is the person in question on Medicaid?

That's where the "recovery" comes in. The Fed and the state are trying to recover the money they shelled out for the person's care before there is any inheritance claimed by heirs.

When a person receives care in a nursing home and it’s paid for by Medicaid, the state retains the right to place a lien on their home so at the time of their death the funds from the sale of the home can be used to repay Medicaid for the cost of care. You won’t be able to sell a house with a lien on it under that lien amount is satisfied, either by paying it outright or the amount coming out of the house sale price. As for always doing it or not, it’s supposed to be required of the states by the federal government, but there are times when a state will not follow through, more from lax standards than not wanting the money. An elder care lawyer specific to your state can guide you through what exactly to expect

We have had similar discussions about Medicaid. Medicaid is a government program for indigent people who have little assets or income and can not afford to pay for their care. If that person has money or property it should be used to cover the costs, whether at home or in a care facility. When those assets are spent only then Medicaid can be applied for.

Each state has its own rules. In Ohio the applicant can have about $2,000 in the bank and a small monthly allowance. Medicaid covers what SS and pensions do not. And if a couple own a house the non-applicant spouse is allowed to keep about &25k in assets as well as the home until he/she dies or moves out. This may have changed since I last dealt with it a few years ago.

When my mother was widowed she moved to Assisted Living and we sold her house. My parents had little savings and their only income was SS so the only asset she had was the house. That money was used to pay her fees, and our plan was to apply for Medicaid when that money was spent.

Igloo asked if I would respond to your question. Not sure if my experience will help.

When my Mom passed she had her house. Because Moms house was For Sale I needed to know the amount of the lean. I called State recovery. Even before COVID the state is slow placing a lean. I was sent a letter telling me the amount owed. Plus paperwork to fill out, part asking questions about if anyone was residing there. Had they been a resident before Mom was placed in a facility. Was this considered the persons main residence. It went on to say that the person residing there maybe allowed to stay, that a lean would be placed on the house but would need to be satisfied if that person dies, leaves, or sells the house. I would think that if "yes" was marked the person would get further paperwork to establish residency. Were they the caregiver, were they disabled, a spouse, able to pay taxes, bills, do upkeep. My disabled nephew was living in Moms house when she passed. Being a big old farmhouse, there was no way he could have afforded the taxes alone the bills and upkeep. I found him an apt with a voucher. He is doing well on his own.

Mom only owed 6k for the 3 months she was on Medicaid. The house was sold 2 yrs after her passing. I had stopped paying taxes when she went into the NH. The offer was enough to cover the 6k, taxes and my out of pocket and a about 10k left split 3 ways.

The lean will not be placed on Moms house until after her death. If the house is sold prior to her death, it has to be sold for market value. The proceeds needing to go to her care. If house is sold after her death, it has to be sold at Market Value. If what is owed to Medicaid is more than the Market Value, that's Medicaid's loss not yours. No child can be held responsible for a Medicaid debt. They will not come after you. If Mom had no house, you still would receive a recovery letter. The State is required to try and recover what they can. If there is nothing, then you tell them there is nothing. Again, they cannot hold you liable for Moms care costs.

Anything that goes into probate, Medicaid can potentially seize. However, you are NOT responsible for any of his outstanding debts once he passes unless you co-signed any kind of bill. That includes medical and hospital bills.

If you are anticipating putting your dad on Medicaid I suggestion you consult an eldercare attorney for estate planning as each state has variations of such laws.

Your best course of action is to spend some of your loved one's money on a consultation with a certified Eldercare attorney who is well-versed in Louisiana Medicaid.

Is there a spouse involved?

Cherokeewaha, this in response to your post under JoAnns detailed info on her MERP experience. You posted that the state and local tax entities are sending you letters / notices. Like sending stuff personally to you, in your name, that’s it, right?

What is likely happening in my not-an-attorney opinion, but been an executor, is that they are trying to force you to assume or perhaps acknowledge / establish a “lineal heirship”.
Stick with me on this..... Right now as there is no executor (as y’all didn’t open probate) and there is no valid legal will (as your mom in a fit of pique probably burned it); there isn’t anyone for state & taxing authorities to quickly fix onto to deal with on your mom’s MERP or property. It all sits in limbo as nobody to legally sign off on stuff. Whatever DPOA existed is over once mom died. But your her daughter as per state records & so in their sights as possible heir.

When someone dies this way they are considered to have died “intestate”. In theory the state assumes authority over the assets of the state until heirs established or until whatever time period & legal filings needed to get beyond that. But it sounds like mom really had no assets to speak of for the state to assume, it’s heavily debts & debts that collide with local tax authorities. There’s no $ advantage for state to assume stuff, but they can’t clear things till that happens. So they want to find somebody to do this. & it’s you as they have your name & contact info from other state agencies, like Medicaid.

If it was a mobile home or a trailer that she had in her name, they are notorious for loosing value & hard to sell except for low $. If she did own the land, and it has years of delinquent prop taxes w interest, it may be worth little. So for heirs, in this scenario, none of this is enough to be worthwhile to ever deal with as it’s all debts.

it’s the “deal with” part that enters this drama. The state wants to find someone to legally deal with all this so they don’t have to.

When someone dies intestate and if there’s heirs who want to establish an inheritance, they do a “lineal heirship”. What lineal does is a deep dive to find all possible heirs, like look at prior marriages or relationships, to ferret out heirs & old assets. Not especially expensive, but very specific steps that need to be done and takes t..i..m..e as the attys need to post Notices in newspapers of records for wherever the deceased &/or their old spouse(s) lived &/or owned real property. Even if decades ago. Then once established the heirs have to all get along & be agreeable to the division of assets / debts. If there were old divorces or out of marriage kids, or old business partners, it can get mucky. But once “lineal” is established, they as a group can do whatever is needed to settle the estate.

Makes sense to do if there’s $ & assets.
Makes no sense to do if all debt.
State & tax guys want to find someone to deal with all this as otherwise they have to deal with things. Tax assessor/ collector imo has upper hand as they place property up at annual delinquent tax sale. If you know it’s delinquent since 2017 or 2018 taxes, & if your state is one that does 3 - 4 years tax redemptions (so tax sale deed done), it might be that the land can transfer ownership to whomever hold the redemptions. New tax deed owner might have MERP lien lurking so they can’t get clear title & Warranty Deed, but they can fix & flip and sell it w/out WD to unsophisticated buyer. I’d suggest that you look to see where the taxes are in delinquency. I bet it’s way beyond property value. Don’t let them place your name to any of this. If they have send a certified letter stating you are not owner or responsible party.