Estate Administration 101: Transfer-on-Death Deeds and Medical Assistance Recovery

We’ve previously discussed how a Transfer-on-Death Deed ("TODD") can be a good tool for avoiding probate and simplifying the estate administration process in certain circumstances. We know that in order to be valid, a TODD must expressly state that the deed is only effective upon the death(s) of one or more grantor owners, transfer the real property interest to one or more grantee beneficiaries, and must comply with all provisions of Minnesota law applicable to deeds of real property. A TODD must also be recorded in the county in which at least part of the real property described in the deed is located and must be recorded before the death of the grantor owner upon whose death the conveyance or transfer is effective.

After the death of the last grantor owner, the property can then transfer to the named grantee beneficiaries. The named beneficiaries must execute and record an Affidavit of Identity and Survivorship, together with a certified copy of the death certificate and a Medical Assistance Clearance Certificate, showing that there are no outstanding Medical Assistance claims or liens against the property for benefits received by the grantor owner during his or her lifetime. Without the accompanying Medical Assistance Clearance Certificate, clear title cannot pass to the grantee beneficiaries or any subsequent owner of the property.

To obtain a Clearance Certificate, an Application of Medical Assistance Clearance must be submitted to the county in which the grantor owner was living at the time of death. The county will then complete a search using the grantor owner’s date of birth and social security number to determine whether or not there were benefits paid on his or her behalf. The county also runs a search on any predeceased spouse to determine whether the spouse also received care.

If either or both the grantor owner or the grantor owner’s predeceased spouse received Medical Assistance, there will likely be a Medical Assistance lien placed against the real property to secure payment of any Medical Assistance claims. Liens last for either 10 or 20 years. The lien must be paid or otherwise satisfied in full before marketable title to the property can be transferred.

For example, Mary is the grantee beneficiary on a TODD for real estate owned by her father, John. John’s wife, Jane, died ten years ago, and jointly owned the property with John at the time of her death. Mary’s attorney submitted an Application for Medical Assistance Clearance, which showed that while John did not receive Medical Assistance benefits during his lifetime, Jane did receive benefits. The State of Minnesota recorded a lien against the property for benefits received by Jane. Mary wishes to sell the property, but must satisfy the Medical Assistance lien before marketable title to the property can transfer to the buyer. Mary decides to pay the Medical Assistance lien out of the closing proceeds on the sale. After the lien has been satisfied, a release will be recorded with the county to show that there is clear title to the property.

Minnesota law contains protective provisions for a surviving spouse as it relates to a homestead. For as long as the surviving spouse is living on the property, a Medical Assistance lien cannot attach (be enforced). Upon the death of the surviving spouse, the lien can attach. It’s often a shock to families who are unaware that one or both of their parents were receiving Medical Assistance in some capacity and that the receipt of benefits subjects the estate to Medical Assistance recovery, even if the first parent to die has been gone for quite some time.

Losing someone you love is difficult, even without the added complexity of navigating the estate administration and Medical Assistance recovery process. Our attorneys are here to assist you. Contact us or book an appointment online to discuss.