The Supreme Court of Idaho rules that the state may assert a claim against the estate of a deceased Medicaid recipient's spouse, even though the couple utilized a Marriage Settlement Agreement (MSA) to convert the wife's community property into the husband's separate property prior to establishing the wife's Medicaid eligibility. In Re Estate of Wiggins (Idaho, No. 39129, Aug. 9, 2013).
Vivian Wiggins entered a nursing home in June 2002. At some point thereafter, Ms. Wiggins and her husband, Emerson Wiggins, entered into an MSA converting all of Ms. Wiggins's community property into Mr. Wiggins's separate property so that Ms. Wiggins could qualify for Medicaid. Mr. and Ms. Wiggins died within two weeks of each other in 2009 and a joint probate estate, valued at $78,659, was opened. The Idaho Department of Health and Welfare filed a claim against the estate for $264,674 for medical services provided to Ms. Wiggins between 2003 and her death.
The personal representative of the estate disallowed the Department's claim, alleging that the state did not have a right to recover against Mr. Wiggins's separate property. Although the estate acknowledged that Idaho law allows estate recovery claims against spousal estates, it argued that those claims were limited to the surviving spouse's community property, not his separate assets. A magistrate court and a district court both ruled in favor of the estate and the Department appealed, claiming that state and federal law permit recovery against any kind of property transferred between spouses, regardless of when the transfer took place and how the surviving spouse owned the funds at his death.
The Supreme Court of Idaho reverses the lower court and finds that the state has the right to recover from Mr. Wiggins's estate. Relying in part on its 2012 ruling in Idaho Dep't of Health & Welfare v. McCormick, the court reiterates that "federal law has granted States the authority to broaden the 'estate' for purposes of recovering medical assistance . . . therefore, Idaho law is effective so long as it is consistent with the policy of federal law . . . Federal law defines asset to include an item to which the recipient would be entitled but for the actions of the recipient or the recipient's spouse. Though this is a broad definition of an asset, the State has clarified that such an asset includes property that was transmuted for Medicaid eligibility, and it specifically provides for the recovery of such assets transmuted by an MSA." (emphasis in original)
For the full text of this decision, go to: https://www.isc.idaho.gov/opinions/39129.pdf
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