New York has revolutionized its medicaid laws and we all have to go back to school! Lawyers and financial planners have always operated upon the assumption that only testamentary assets are subject to claims by medicaid. That is no longer true. The medicaid law revisions now go beyond the probate and intestate estate to include “any other property in which the individual has any legal title or interest at the time of death, including jointly held property, retained life estates, and interests in trusts, to the extent of such interests.” . No longer can assets be easily shielded by a trust, or by deeding the house to a family member and reserving a life estate. Joint bank accounts appear to be fair game for recovery efforts by the state.
At this time, it is difficult to ascertain whether or not trusts established years ago which are outside of the five year look back period will be targeted. The long range planning for Alzheimer’s patients will almost certainly be affected. There are conflicts between the new state law and retirement accounts created under ERISA which would seem to be immune from attack — but no one knows for sure at this point.
There are now real questions as to the future of elder law and estate planning as these areas pertain to asset protection from medicaid liens. We are certain to experience a flood tide of litigation on these issues and some predict that the cost to the state will outweigh any financial benefits. I have begun to see an influx of releases in personal injury settlements that contain representations that the recipient is not subject to a medicaid lien and will hold the payor harmless against any claims asserted by medicaid. It is likely that real estate transactions will include such representations made to title insurance companies since the proceeds of a sale by a homeowner who has been a recipient of public assistance or medicaid may now be targeted as well.
Until things settle down and court decisions in cases not as yet commenced give us a better sense of the direction of enforcement and the limitations which may be placed upon state collectors, care and vigilance will almost certainly be the watchwords.