Passing On Assets and Estate Recovery Claims
Planning the distribution of an estate and keeping a will updated are necessary to ensure that specific wishes are carried out after a person’s passing. There’s no denying that several complexities are involved in this process, but it is essential to take the time to make sure that the division of an estate is organized. When devising a will, one of the most common concerns of a parent is ensuring that his or her child is able to become the owner of a property, such as the family home.
One family’s story relating to passing the family home over to a child is described in a Pittsburgh Post-Gazette article. The story mentions how an elderly individual’s need for nursing care funds from Pennsylvania’s Medical Assistance program can impose estate recovery claims against assets that a person wants to preserve for their child or children. In this specific case, a Pittsburgh elderly woman’s daughter – a single adult – gave up a job in California to take care of the mother. In doing this, the daughter is considered a “caregiver child.” While the mother can name her daughter the recipient of the house in her will, if the woman does so before her death and needs to receive care at a nursing facility, a portion or the entirety of her nursing care may eventually come from the value of assets distributed in her probate estate. If the state were to make an estate recovery claim for payments made by Medical Assistance and the woman’s probate estate ends up being depleted, the house that the woman wanted to leave to her daughter would have to be sold to compensate for the remaining funds.
Several families in Pittsburgh may encounter similar estate predicaments to the one mentioned in the article. In 2005, the federal Deficit Reduction Act was created, allowing a five year “look-back period” when a home is transferred before a benefactor’s death and upon their entrance into a nursing facility and application for Medical Assistance. A “transfer penalty” is created based on the value of the transferred house. However, when a child is recognized as a “caregiver,” basically taking on the full-time responsibility for their parent, federal law makes an exception to imposing a transfer penalty when the house is transferred. This is simply called the “caregiver child” exception.
Similar to this Pittsburgh family’s situation, a child has to have lived with their parent for at least two years right before the parent enters a nursing facility in order for a “caregiver child” exception to be made. In addition, it must be proven that without that care, the parent would have needed to enter a facility years before. Some individuals will seek assistance from an estate attorney or an elder law attorney to make sure that appropriate paperwork is filed accordingly or that a physician’s affidavit is collected which cites how the child’s care for their parent kept them out of a nursing facility.
