State Can Recover Medicaid Benefits From Annuity That Named Trust as Beneficiary

Reversing a lower court, a California appeals court holds that the state was entitled to recover Medicaid benefits from an annuity that named a trust as the beneficiary. Riverside County Public Guardian v. Snukst (Cal. Ct. App., 4th Dist., No. E074949, Jan. 10, 2022).

Joseph Snukst purchased an annuity and named his revocable trust as the beneficiary. Mr. Snukst’s niece was the beneficiary of the trust. Later, Mr. Snukst entered a nursing home, and had a conservator appointed for him. Mr. Snukst received Medicaid benefits for three years before his death.

After Mr. Snukst died, the state presented a claim for reimbursement of Medicaid expenses paid on his behalf to the conservator. The conservator asked the court for permission to pay the state. The probate court denied the claim, finding that the annuity became an asset of the trust once Mr. Snukst died. The conservator appealed.

The California Court of Appeals, Forth District, reverses, holding that the state should have been reimbursed from the trust before distributions were made to the beneficiary. According to the court, the definition of estate under California law includes assets conveyed to an heir through a living trust, so the annuity is subject to estate recovery.

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