Estate Recovery Act - Can the State really take your home when you die? - Michigan
Updated: Oct 9, 2019
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Question: I have heard that if I go into a nursing home the State will take my home when I die. Is that true?
Answer: Maybe. The State of Michigan enacted the Estate Recovery Act in 2011. Basically, the Act says that if you go on Medicaid for long-term care (such as a nursing home, MI Choice Waiver, etc.), the State can recover the money it paid for your care from your estate when you die. The State is allowed to take up to approximately one-half of the value of your home (it’s actually based on the value of homes in your geographic location). For example: If you die and your home is worth $100,000, then the State will take about $50,000 when the home is sold through your probate estate. However, if you were only receiving Medicaid for a few months in the nursing home and the total amount they paid for your care was only $25,000; then the State could only collect $25,000.
There are four exceptions to the rule of taking your home: (1) If your spouse still lives in your home, (2) If your child lives in your home and is under 21, blind or disabled, (3) If your relative lives in your home and was living in your home and caring for you for 2 years prior to you entering long-term care, or (4) If your sibling is living in your home and was living in the home for at least one year prior to you entering long-term care and they also own an equity interest in your home. In addition, there are Hardship Exceptions that can be applied for.
A Lady Bird Deed can be an effective way to plan around Estate Recovery under the current law. This will enable you to stay on Medicaid while in long-term care and then your home will automatically transfer to a loved one when you die; avoiding Estate Recovery. The State will not be able to take your home.
As the laws regarding Medicaid are always changing, I would suggest that you talk to an elder law attorney who specializes in Medicaid for long-term care and see what options you have available. I would do it sooner than later as the laws are always changing.
Michael B. Walling is an Elder Law & Estate Planning attorney with an advanced Master of Laws degree. He manages the Elder Law Center and law firm of Michael B. Walling, PLC. He has offices in Battle Creek and Portage, Michigan. Mr. Walling is also a Part-Time Professor at Western Michigan University.
This column is intended for general information purposes only and should not be considered as legal advice to any particular person.