Medicaid Applicant Can Receive Penalty Period Based on Wife's Transfer on Death

A Missouri court of appeals rules that a Medicaid applicant is subject to a penalty period based on his wife's transfer on death of his interest in property to a revocable trust. Hallam v. Missouri Department of Social Services (Mo. Ct. App., No. WD81466, Oct. 9, 2018).

Evelyn and Joe Bell each created a limited liability company (LLC) and transferred a one-half interest in their property into the LLCs. Mrs. Bell's LLC provided that on her death, her interest would be transferred to a revocable trust. Mr. Bell transferred his LLC to Mrs. Bell who transferred the LLC to the trust, effective after Mrs. Bell's death. After Mrs. Bell died, Mr. Bell entered a nursing home and applied for Medicaid. The state imposed a penalty period, finding Mr. Bell transferred property for less than market value.

Mr. Bell appealed, arguing that Mrs. Bell's transfer on death of the couple's property was not a voluntary disposal of assets by a spouse that would disqualify Mr. Bell from benefits. The state upheld the penalty period, and Mr. Bell appealed to court.

The Missouri Court of Appeals, Western District, affirms the penalty period, holding that Mrs. Bell's transfer on death was a disposition of assets that subjected Mr. Bell to a penalty period. The court concludes that there "can be no meaningful dispute that the instruments executed by Mrs. Bell 'gave away' her assets, albeit in a delayed manner that first required the condition of her death." According to the court, federal Medicaid law requires that the assets in Mrs. Bell's trust that previously belonged to Mr. Bell were to be treated as assets disposed of by Mr. Bell.

For the full text of this decision, go to: https://www.courts.mo.gov/file.jsp?id=131619

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