CATEGORIES: Elder Law, Medicaid Planning, Crisis Planning, Advance Planning, Asset Protection, Nursing Home, Long Term Care, Elder Care Attorney, Medicaid Estate Recovery, Winston Salem, North Carolina, NC.
While putting a home or other real property into a Joint With Right of Survivorship (JTWROS) deed has been effective in protecting homes and other real property from Medicaid Estate Recovery claims following the owner’s death, key members of the North Carolina Elder Law bar believe that JTWROS deeds may protect real property against claims from all other general estate creditors (including all estate medical creditors), as well.
ASSETS, INCLUDING REAL PROPERTY, NOT SET UP TO TRANSFER BY RIGHT OF SURVIVORSHIP MAY BE SUBECT TO PROBATE CREDITORS
If an asset owned by a person who dies (decedent) has not been set up to be transferred directly to an heir via Right Of Survivorship (ROS), or other appropriate method, such asset normally falls down into the decedent’s estate, and becomes an “estate asset”. Under North Carolina probate law, before the decedent’s beneficiaries can be paid according to a will (or according to state law if there is no will), all valid estate creditors (including Medicaid) must be paid first. Where assets were held in a revocable trust, such assets may still be pulled back into the estate after death to pay creditor’s claims.
MEDICAID AND OTHER MEDICAL BILLS MAY BANKRUPT AN ESTATE
For anyone who dies with large unpaid medical bills, including hospital bills, ambulance bills, physician bills, surgery bills, medical treatment bills, and unpaid care facility bills, all of these bills may likely be attached to the decedent’s estate during probate. If Medicaid has been used for nursing home care or other care, Medicaid has kept track of every dollar spent on the Medicaid recipient’s care during their life. Medicaid then constructively attaches its bill, which can be hundreds of thousands of dollars in some cases, to the Medicaid recipient’s/decedent’s estate during the county probate process. Any such large bills may bankrupt the decedent’s estate, leaving no assets for beneficiaries, and any home or real property (frequently the largest assets most people own) may be lost to medical estate creditors.
JTWROS DEEDS PROTECT AGAINST MEDICAID ESTATE RECOVERY
In order to protect homes, family farms, and other real property against Medicaid Estate Recovery, elder law attorneys may use a Joint with Right of Survivorship (JTWROS) deed to set up ownership of the real property similar to a joint with right of survivorship bank account. When a couple holds a joint bank account with the right of survivorship, when one member of the couple dies, the ownership of the balance of that account passes immediately and directly to the survivor of the couple, in a transaction that completely avoids probate. JTWROS deeds pass real property in the same way, and can be set up to directly pass real property to children, grandchildren, other family members, or even friends.
JTWROS transfers are not subject to Medicaid’s 5-year lookback penalty (under current NC Medicaid rules), when the beneficiary who receives joint ownership pays the market value for his or her share (the beneficiary’s initial share is typically 1% or less of the entire parcel.)
JTWROS deeds have proven effective in keeping property away from probate Medicaid Estate Recovery, as Medicaid does not currently attempt to attach homes or other real property transferred to heirs by JTWROS deed in North Carolina.
JTWROS DEEDS MAY PROTECT AGAINST ALL ESTATE CREDITORS IN ADDITION TO MEDICAID
Key members of the NC Elder Law bar believe that JTWROS deeds have even much more usefulness than protecting from Medicaid Estate Recovery alone—JTWROS may indeed protect NC real property transfers to beneficiaries against all other general estate creditors, including all medical estate creditors.
The legal case Wilson County v. Wooten 251 N.C. 667, 111 S.E.2d 875 (1960), which held that the welfare departments of Durham and Wilson counties could not attach bank account assets transferred to a beneficiary via right of survivorship, likely protects all right of survivorship transfers, including JTWROS deed real estate transfers, from the decedent’s estate creditors in North Carolina.
The Wilson County v. Wooten ruling follows old English joint tenancy common law going back many years, where real property held in a joint tenancy passes at death by operation of law to the survivor free and clear of claims of creditors or other heirs of the deceased joint tenant. The Executor or Personal Representative of the decedent’s estate (and the creditors of that estate), thus have no claim to such transferred property.
There are some inconsistencies to Wilson and English common law within North Carolina statutes, but influential members of the NC Elder Law bar believe that Wilson, and English joint tenancy common law precedent, remain solid, keeping JTWROS deeds a highly useful tool in protecting real property transfers to beneficiaries against potentially all estate creditors.
Burti, Christopher L., Statewide Title, Farmville, NC.
Rocamora, Larry, McPherson, Rocamora, Nicholson & Wilson, PLLC, Durham, NC.
Wilson County v. Wooten 251 N.C. 667, 111 S.E.2d 875 (1960)