A Missouri appeals court rules that the property of a Medicaid recipient is subject to estate recovery where the owner executed a quitclaim deed giving her a life estate with the power to sell. In Re Estate of Hayden (Mo. Ct. App. E.D., Div. 4, No. ED90403, June 30, 2008).
Leonilda Hayden executed a quitclaim deed in 1979 giving her a life estate with the power to convey the property (commonly known as a "Lady Bird deed"), naming several remaindermen. In 2003, Ms. Hayden began receiving Medicaid benefits. When Ms. Hayden died in 2005 without having sold or conveyed her property, the Missouri Department of Social Services filed a claim against the estate for reimbursement of Medicaid benefits. The court appointed a personal representative for the estate, who then filed suit against the remaindermen to compel the sale of Ms. Hayden's property to pay the Department's claim. The probate court ruled in favor of the personal representative, finding that under Missouri law the transfer of the property to a remainderman is a recoverable transfer.
The remaindermen appealed, arguing that the transfer of property through the operation of a life estate was not a "transfer subject to the satisfaction of the decedent's debts immediately prior to the decedent's death" as required by Missouri law (RsMo 461.300). The remaindermen also argued that the revisions of the Missouri probate code that allowed estate recovery from a life estate took place after Ms. Hayden executed her deed and were therefore an ex post facto application of law since the revised law changed the legal effect of her conveyance.
The Missouri Court of Appeals, Eastern District, disagrees with the remaindermen and upholds the probate court's decision. The court finds that the conveyance of property was a recoverable transfer because Ms. Hayden had the power to revoke her deed up until the time of her death, making it subject to creditors. The court also rules that Ms. Hayden's "acceptance of Medicaid benefits after the passage of [the revised laws] that affected the subject interests" nullified any argument that the estate recovery statutes operated as ex post facto law.
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