Providing Peace Of Mind
For You And Your Family

What assets are at risk during Medicaid estate recovery efforts?

On Behalf of | Oct 16, 2023 | Estate Administration And Probate |

When someone dies in Virginia, the property that they own becomes their estate. Their financial obligations and debts become the responsibility of their estate. The personal representative that they name in their testamentary documents or the individual appointed to that role by the courts must fulfill their financial responsibilities during estate administration.

The probate process in Virginia allows creditors to file a claim in court seeking repayment for any valid debts owed by the decedent. One of the biggest sources of probate claims is the Virginia Medicaid program. In theory, the state can request repayment for all medical benefits provided to the decedent before their passing. Their personal property could end up subject to liquidation to repay those benefits.

Any and all assets are at risk

Some people mistakenly believe that their children or their spouses have certain protections under Virginia law. However, the rights of inheritance enjoyed by family members are secondary to the rights of those with financial claims against the estate. Someone’s bank accounts and personal property could end up utilized to repay their creditors.

In fact, the Medicaid estate recovery program in Virginia can even make a claim against someone’s primary residence. Although an individual’s home generally does not count against them when they apply for benefits, it has no protection during estate recovery efforts. The tragic truth is that every last resource that someone acquired during their life could be at risk after their passing if they required extensive Medicaid support in their final years.

The only way to prevent the liquidation of someone’s resources is advance planning. Transferring assets to others or starting a trust are both ways that testators thinking about their future medical needs and their legacies can protect resources from liquidation during probate court. The sooner someone begins planning, the easier it will be for them to qualify for Medicaid when they need benefits without a penalty, and the less likely they are to face creditor claims as they age or after their death.

Learning about the factors that can complicate estate administration and someone’s last wishes may lead to more effective estate planning. For example, seeking legal guidance proactively can help to safeguard one’s assets when they’re at risk of creditor claims.