Wills vs. Trusts – Part 7

by Christine Steinmetz, JD

This post is the seventh in a series regarding wills, trusts, and estate planning. Other posts in the series can be found here.

In our previous post, we discussed how a revocable grantor trust DOES NOT shelter assets, including one’s homestead, for Medicaid eligibility. In addition, the fact that a homestead has been held in the trust for longer than the 5 year look back period doesn’t make that homestead exempt for the state’s Medicaid program. The key to whether an asset is counted or exempt by Medicaid is whether a person can access the property. There may be planning that a Medicaid attorney can do; however, you will want to consult with the attorney before making any changes or transfers.

happycouple21Clients call the Legal Hotline for Michigan Seniors on a regular basis for information on wills, trusts, and Medicaid. Many clients call asking questions regarding Estate Recovery and wanting to know how it could affect their estate. In 2007, Michigan’s Estate Recovery Law went into effect. The Estate Recovery policy became effective July 1, 2011, and applies to all Medicaid recipients who were 55 or older and received Medicaid long term care services after September 30, 2007. Estate Recovery refers to the Michigan Department of Health and Human Services’ policy to seek reimbursement from people who have received Medicaid long-term care benefits while in a nursing home or at a home through the Medicaid Waiver program. The program may seek to recover what it has paid out in benefits by filing a claim against the probate estate of the deceased Medicaid beneficiary.

The key to Estate Recovery is that is only applies to the probate estate of the deceased Medicaid beneficiary. Assets included in the probate estate are cars, homes, stocks, and bank accounts.  However, assets of the deceased person held jointly with another person are not subject to a State claim. As we discussed in our previous posts, only assets held in a person’s name alone at the time of their death go through probate. Since a person can only have limited assets in order to be eligible for Medicaid, there are not many assets that the State’s claim would be subject to. For most people, estate recovery will apply only to their home, since a person’s home equity is exempt up to $552,000 in 2015. In other words, if a person owns a home in their name alone at the time of their death and they were a Medicaid recipient, then that person’s estate that includes their home is subject to the a State claim for Estate Recovery.

It is important to note that there are exceptions to Estate Recovery. The State may decide not to recover money if it creates an “undue hardship” or if certain people are lawfully living in the beneficiary’s home. To apply for an undue hardship, an application must be completed and submitted no later than 60 days from the date of the Estate Recovery notice. If you have any questions as to whether you fall under an exception to Estate Recovery, please contact the legal hotline and one of our attorneys would be happy to assist you.

The laws for Medicaid and Estate Recovery are constantly changing. We always recommend that you contact an Elder Law attorney who can properly advise you to make sure that you are taking the appropriate action.

In our next post, we will continue our discussion on estate planning options. If you have questions, please contact the Legal Hotline for Michigan Seniors at 800.347.5297 and our hotline attorneys will be happy to answer your questions.


Christine SteinmetzChristine Steinmetz is a Part-time Attorney at Elder Law of Michigan, and has been a member of the Elder Law team since 2011.

Mrs. Steinmetz graduated from Brooklyn College with a degree in Business, Finance, and Management.  She received her Juris Doctorate from Thomas M. Cooley Law School in Lansing, Michigan.  While in law school, Christine developed an interest in the field of Elder law as an intern at Thomas M. Cooley’s Sixty Plus Elder Law Clinic.

After graduating from law school, Christine worked for a Lansing law firm and later opened her own practice, The Law office of Christine M. Steinmetz, PLC, in Okemos, Michigan.  As a general practice lawyer, Christine has represented clients in a variety of legal subject areas, including estate planning, Social Security, housing law, family law, and criminal matters.  As an attorney at Elder Law, Christine advises clients on issues including Medicare/Medicaid, wills and trusts, estate planning, landlord/tenant, and consumer law.

Christine Steinmetz also holds a Certificate of Completion in the areas of probate and estate planning issued by the Institute of Continuing Legal Education and the Probate and Estate Planning Section of the State Bar of Michigan.

Leave a Reply