Unlike Iowa, Missouri Statutory Definition of “Estate” Does Not Allow Spousal Recovery
In this case, the decedent’s wife received Medicaid benefits until the time of her death in 2002. The total amount of benefits received amounted to $153,180.59. No estate was opened for her, and she was survived by her husband, the decedent in this case. He never received any Medicaid benefits and died in 2006. Upon his death, the Missouri Department of Social Services filed a claim against his estate for Medicaid assistance paid to his pre-deceased wife. The trial court dismissed the claim and the state appealed.
On appeal, the state claimed that trial court incorrectly concluded that Mo. Rev. Stat. §473.399.2 exceeded the allowable provisions for recovery under the federal Medicaid Act (42 U.S.C. §1396p(b) – that provision allows recovery for benefits paid to pre-deceased spouse from the estate of the surviving spouse. But, the federal statute is clear that the state agency is only authorized to recover from real and personal property and other assets that are included in the decedent’s estate as defined by state probate law. The federal statute also provides that a state may utilize an alternative (more expansive) definition of “estate” that includes any other real and personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement. In other words, the expansive definition includes non-probate transfers.
The Missouri statutory scheme specifies that the state may recover Medicaid benefits paid to a pre-deceased spouse from the surviving spouse’s estate and that the “debt shall be collected as provided by the probate code of Missouri.” While the court noted that the federal Medicaid spousal recovery provision allows a state to seek recovery from any remaining assets of the surviving spouse, the court reasoned that is only the case if the state has adopted the more expansive definition of “estate” – when the state’s definition of “estate” includes both probate and non-probate transfers.
Missouri law defines “estate” as the “real and personal property of the decedent…, as from time to time changed in form by sale, reinvestment, or otherwise, and augmented by any accretions and additions thereto and substitutions therefore, and diminished by any decreases and distributions therefrom” (Mo. Rev. Stat. §472.010(11)). While the state Medicaid agency argued that the definition includes non-probate transfers, the court noted that beneficiaries of non-probate property in Missouri must only account to the personal representative for a pro-rata share of the value of all such property received to the extent necessary to discharge claims remaining unpaid after application of the decedent’s estate. That means that creditors only have rights in such property when the decedent’s probate estate is insufficient to satisfy their claims. So, Missouri probate law does not adopt the more expansive definition of estate to include all non-probate transfers and Medicaid spousal recovery is not allowed.
However, the outcome would be different in Iowa. In 2005, the Iowa Supreme Court (In re Laughead, 696 N.W.2d 312 (Iowa 2005))allowed for spousal recovery from the estate of a surviving spouse of a Medicaid recipient. The court determined that Iowa Code §249A.5(2)(c) defined “estate” so as to include non-probate property. The court reached a similar conclusion in 2006 (In re Serovy, 711 N.W.2d 290 (Iowa 2006)). The Missouri case is In re Estate of Shuh, No. ED89849, 2008 Mo. App. LEXIS 148 (Mo. Ct. App. Jan. 29, 2008).
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