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New Jersey Estate Administration & Litigation: Medicaid Liens and the Elective Share

By: Justin M. Smigelsky, Esq.

In a recent, published decision, In the Matter of the Estate of Arthur E. Brown, the Appellate Division addressed DMAHS’s ability to assert a lien against the estate of a Medicaid recipient for the unclaimed elective share of his wife’s augmented estate.  In affirming the Judgment of the Chancery Division, Probate Part of Burlington County, the Appellate Division held that the trial judge correctly found the elective share against the deceased spouse’s estate to be includible in the Medicaid recipient’s estate and, therefore, subject to a Medicaid lien. The following is an overview of the law regarding liens against the estate of a Medicaid recipient in New Jersey, and the impact of the New Jersey elective share:

Medicaid is a federally-created, state-implemented program which provides medical assistances to qualifying individuals. Federal Medicaid law requires participating states “to enact certain estate recovery provisions as part of their medical assistance plans.” Specifically, when an individual was over the age of fifty-five (55) years of age when he or she received medical assistance, states are required to “seek adjustment or recovery from the individual’s estate” for certain medical assistance provided. Additionally, participating states may recover Medicaid benefits after the death of the recipient’s surviving spouse provided that the Medicaid recipient leaves no surviving child who is under the age of 21, blind, or permanently and totally disabled.

To comply with federal estate recovery requirements, New Jersey enacted N.J.S.A. 30:4D-7.2(a)(2), which permits the filing of a lien against and recovery sought from the estate of the deceased recipient for assistance correctly paid or to be paid on his or her behalf for all services when he or she was fifty-five (55) years of age or older. For purposes of recovery, New Jersey statute defines an individual’s “estate” as including:

all real and personal property and other assets included in the recipient’s estate as defined in 3B:1-1, as well as any other real and personal property and other assets in which the recipient had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the recipient through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement.

N.J.S.A. 30:4D-7.2(a)(3). Pursuant to N.J.A.C. 10:49-14.1(d), the Division of Medical Assistance and Health Services (DMAHS) is authorized to file any claim or lien against an estate within three (3) years of having received written notice from the estate’s representative or other interested party of the death of the Medicaid beneficiary.

Pursuant to N.J.S.A. 10:71-4.10(b)(3), income or resources which an individual is entitled to, but does not receive because of action or inaction by the individual, will constitute a transfer of assets for less than fair market value if within the five-year look-back period. To prohibit disinheritance of a surviving spouse who needs continuous support, New Jersey law entitles a surviving spouse (with some exceptions) to an elective share of one-third (1/3) of the deceased spouse’s augmented estate. Accordingly, as explained in In the Matter of the Estate of Arthur E. Brown, an inheritance, or the spousal elective share under N.J.S.A. 3B:8-10 of a deceased spouse’s estate, will be deemed an “available” asset to the surviving spouse during lifetime for purposes of Medicaid qualification, as well as asset in which the recipient had legal title or interest at the time of his or her death. In the event that an inheritance is waived, or the surviving spouse waives the elective share, the waiver may be deemed a transfer of an available asset subject to a penalty period of ineligibility from Medicaid benefits. Similarly, DMAHS may include the value of the elective share against the predeceasing spouse’s estate for purposes of asserting a lien against the estate of the recipient spouse.

Because estate and trust planning, administration, and litigation requires specialized knowledge, you may wish to consult with an experienced attorney if you have questions regarding your estate plan, the probate process, administration of an estate or trust, Medicaid liens asserted against an estate, the elective share, fiduciary obligations, preparation of a formal or informal accounting, refunding bonds and releases, and the procedures for filing a formal accounting or exceptions thereto. This article is for information purposes only, and is neither legal advice nor the creation of an attorney client relationship.

 

Justin M. Smigelsky, Esq. /  Timothy J. Little, P.C.  –  2017  –  All Rights Reserved

Timothy J. Little, P.C. is a full-service law firm with offices in Woodbridge and Chesterfield, New Jersey. Timothy J. Little, P.C. represents individuals, families and businesses throughout New Jersey including Middlesex County (Old Bridge, Woodbridge, Sayreville, East Brunswick, Spotswood, Perth Amboy, Dunellen, Colonia, Sewaren, Iselin, Avenel, Fords, Keasbey, Menlo Park, Port Reading, South Amboy, Monroe, Edison, Carteret, Cranbury, Helmetta, South River, Milltown, Highland Park, Jamesburg, Laurence Harbor), Monmouth County (Aberdeen, Matawan, Hazlet, Holmdel, Cliffwood Beach, Keyport, Keansburg, Middletown, Lincroft, Manalapan, Englishtown, Marlboro, Freehold), Union County (Rahway, Elizabeth), Ocean County, Somerset County, and Burlington County. If you have any questions or concerns regarding estate planning, estate administration, or estate litigation, contact the experienced estate attorneys at Timothy J. Little, P.C.

Estate Practice Areas:  Probate procedures, intestacy, fiduciary duties and obligations, fiduciary accountings and exceptions, fiduciary compensation, marshaling of assets, insolvency petitions, will contests and disputes, caveats, the elective share, Power of Attorney abuse, ejectment and eviction, Refunding Bonds and Releases, drafting of Wills and Trusts, appointment and removal of fiduciaries,New Jersey Transfer Inheritance Tax (IT-R), New Jersey Estate Tax (IT-Estate)

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New Jersey Estate Administration & Litigation: Medicaid Liens and the Elective Share

New Jersey Estate Administration & Litigation: Medicaid Liens and the Elective Share

By: Justin M. Smigelsky, Esq.

In a recent, published decision, In the Matter of the Estate of Arthur E. Brown, the Appellate Division addressed DMAHS’s ability to assert a lien against the estate of a Medicaid recipient for the unclaimed elective share of his wife’s augmented estate.  In affirming the Judgment of the Chancery Division, Probate Part of Burlington County, the Appellate Division held that the trial judge correctly found the elective share against the deceased spouse’s estate to be includible in the Medicaid recipient’s estate and, therefore, subject to a Medicaid lien. The following is an overview of the law regarding liens against the estate of a Medicaid recipient in New Jersey, and the impact of the New Jersey elective share:

Medicaid is a federally-created, state-implemented program which provides medical assistances to qualifying individuals. Federal Medicaid law requires participating states “to enact certain estate recovery provisions as part of their medical assistance plans.” Specifically, when an individual was over the age of fifty-five (55) years of age when he or she received medical assistance, states are required to “seek adjustment or recovery from the individual’s estate” for certain medical assistance provided. Additionally, participating states may recover Medicaid benefits after the death of the recipient’s surviving spouse provided that the Medicaid recipient leaves no surviving child who is under the age of 21, blind, or permanently and totally disabled.

To comply with federal estate recovery requirements, New Jersey enacted N.J.S.A. 30:4D-7.2(a)(2), which permits the filing of a lien against and recovery sought from the estate of the deceased recipient for assistance correctly paid or to be paid on his or her behalf for all services when he or she was fifty-five (55) years of age or older. For purposes of recovery, New Jersey statute defines an individual’s “estate” as including:

all real and personal property and other assets included in the recipient’s estate as defined in 3B:1-1, as well as any other real and personal property and other assets in which the recipient had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the recipient through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement.

N.J.S.A. 30:4D-7.2(a)(3). Pursuant to N.J.A.C. 10:49-14.1(d), the Division of Medical Assistance and Health Services (DMAHS) is authorized to file any claim or lien against an estate within three (3) years of having received written notice from the estate’s representative or other interested party of the death of the Medicaid beneficiary.

Pursuant to N.J.S.A. 10:71-4.10(b)(3), income or resources which an individual is entitled to, but does not receive because of action or inaction by the individual, will constitute a transfer of assets for less than fair market value if within the five-year look-back period. To prohibit disinheritance of a surviving spouse who needs continuous support, New Jersey law entitles a surviving spouse (with some exceptions) to an elective share of one-third (1/3) of the deceased spouse’s augmented estate. Accordingly, as explained in In the Matter of the Estate of Arthur E. Brown, an inheritance, or the spousal elective share under N.J.S.A. 3B:8-10 of a deceased spouse’s estate, will be deemed an “available” asset to the surviving spouse during lifetime for purposes of Medicaid qualification, as well as asset in which the recipient had legal title or interest at the time of his or her death. In the event that an inheritance is waived, or the surviving spouse waives the elective share, the waiver may be deemed a transfer of an available asset subject to a penalty period of ineligibility from Medicaid benefits. Similarly, DMAHS may include the value of the elective share against the predeceasing spouse’s estate for purposes of asserting a lien against the estate of the recipient spouse.

Because estate and trust planning, administration, and litigation requires specialized knowledge, you may wish to consult with an experienced attorney if you have questions regarding your estate plan, the probate process, administration of an estate or trust, Medicaid liens asserted against an estate, the elective share, fiduciary obligations, preparation of a formal or informal accounting, refunding bonds and releases, and the procedures for filing a formal accounting or exceptions thereto. This article is for information purposes only, and is neither legal advice nor the creation of an attorney client relationship.

 

Justin M. Smigelsky, Esq. /  Timothy J. Little, P.C.  –  2017  –  All Rights Reserved

Timothy J. Little, P.C. is a full-service law firm with offices in Woodbridge and Chesterfield, New Jersey. Timothy J. Little, P.C. represents individuals, families and businesses throughout New Jersey including Middlesex County (Old Bridge, Woodbridge, Sayreville, East Brunswick, Spotswood, Perth Amboy, Dunellen, Colonia, Sewaren, Iselin, Avenel, Fords, Keasbey, Menlo Park, Port Reading, South Amboy, Monroe, Edison, Carteret, Cranbury, Helmetta, South River, Milltown, Highland Park, Jamesburg, Laurence Harbor), Monmouth County (Aberdeen, Matawan, Hazlet, Holmdel, Cliffwood Beach, Keyport, Keansburg, Middletown, Lincroft, Manalapan, Englishtown, Marlboro, Freehold), Union County (Rahway, Elizabeth), Ocean County, Somerset County, and Burlington County. If you have any questions or concerns regarding estate planning, estate administration, or estate litigation, contact the experienced estate attorneys at Timothy J. Little, P.C.

Estate Practice Areas:  Probate procedures, intestacy, fiduciary duties and obligations, fiduciary accountings and exceptions, fiduciary compensation, marshaling of assets, insolvency petitions, will contests and disputes, caveats, the elective share, Power of Attorney abuse, ejectment and eviction, Refunding Bonds and Releases, drafting of Wills and Trusts, appointment and removal of fiduciaries,New Jersey Transfer Inheritance Tax (IT-R), New Jersey Estate Tax (IT-Estate)

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