Many individuals are concerned about the cost of long term care and one of their estate planning choices is to try and qualify for Medicaid. Medicaid is a government benefit that provides long term care coverage in the event your assets and income are insufficient. Under the Medicaid system in Michigan there are certain assets that are protected, which means that the State of Michigan does not require that you sell or liquidate this asset to pay for your care. Although these assets are limited they include one home, one car, personal property and up to $2,000 in a bank account. Although these assets are protected during the stay in a nursing home under Medicaid coverage, the state can ultimately recover the amount they paid during the course of your care. Under the Michigan Estate Recovery Act, an estate is defined as any property or assets that pass through probate. In the event your home, cars, limited insurance benefits or your small bank account is in your individual name they must ultimately pass through probate under the terms of your will. Before the assets are distributed, Medicaid will file a lien against those assets to reimburse them for benefits paid on your behalf while you were in the nursing home. There are some exceptions to the estate recovery act, but they are very limited. The State of Michigan will not go after a probate estate if it will create undo hardship on the beneficiary’s spouse or the beneficiary’s child who is under age 21, is blind or is permanently disabled. The best way to avoid the State of Michigan coming after your estate is to not allow your assets to pass through probate. If your home, bank account, life insurance proceeds were all set up to pass through a living Trust and not through probate, under the current law the State of Michigan would not be able to recover the amount paid in for the deceased’s nursing home care. In other words, assets that pass via a living Trust do not go through probate and therefore are not subject to Michigan’s Estate Recovery Act.
Goudy Bookletter 1911