BizLawBuz …. The Power of Know

For several years now, Michigan Medicaid recipients have been waiting apprehensively for the state to implement a program whereby Medicaid benefits paid out during a person’s lifetime will be recovered from that person’s estate after death. Generally called “estate recovery,” this program is required by federal law. Michigan submitted its proposed program to the federal government four years ago, but cannot implement it until the feds approve it. That approval is expected at any time.

In anticipation of the federal approval, on July 1, 2011, the Michigan Department of Human Services will publish new policy detailing how it proposes implementing estate recovery. According to the new policy, estate recovery will only affect people who began receiving Medicaid after September 30, 2007, Medicaid recipients over age 55, and recipients who are permanently institutionalized regardless of age.

When estate recovery takes place
Estate recovery will not take place until after the Medicaid recipient dies. If the Medicaid recipient is survived by a spouse, by a child who is under age 21, or by a child who is blind or permanently disabled, then there will be no estate recovery until after those persons die.

The state may decide not to pursue recovery at all if recovery will create an “undue hardship.” Undue hardship exists when the assets of the Medicaid recipient are the sole source of income for surviving family members, such as a family farm or business. It also exists when the home is of “modest value” or when a survivor would become eligible for Medicaid if estate recovery were to occur.

Asset preservation strategies
Importantly, the state will only seek recovery from a decedent’s assets which pass through probate court. This means that a number of asset preservation strategies are still available, such as joint ownership, ownership subject to a life estate, and beneficiary designations on accounts and life insurance policies.

Assets exempt from estate recovery
Finally, there are certain assets that are exempt from estate recovery. For example, the state will not pursue recovery if the cost of recovery is expected to exceed the value of the asset.

The Department of Human Service’s new policy answers a number of questions, but it does not contain a lot of detail. We will still have to wait for the program to be put into practice to see just how it will affect Medicaid planning.

Lee Flaherty

As someone who earns his living in the court room (or trying to keep things out of the court room), I have done my share of belly aching about the imperfections of the American judicial system. It takes too long and costs too much money to get matters to trial. Judges can be indecisive and sometimes inhospitable. Juries are not as informed and attentive as we would like. Yet, for all my griping, my personal travels over the last few months have reminded me emphatically of how uniquely special and important is our system of government and its deference to the rule of law.

On May 12, my wife, Jessica, and I traveled to Akron, Ohio to attend a special session of the United States District Court for the Northern District of Ohio. More than 20 federal judges, along with numerous elected officials, attorneys, and community members, gathered to pay tribute to the late Sam H. Bell. Judge Bell was appointed to the federal bench in 1982; he took inactive status in 1998. I had the privilege of clerking for Judge Bell for two years after I finished law school. He was the epitome of what a judge should be: learned, disciplined, courteous and fair.

Judge Bell treasured our country’s history, and he spent a lifetime upholding and defending the Constitution. At every opportunity, he spoke of the importance of an impartial, independent judiciary to a free society. He reminded us of the central role the federal judiciary played in establishing and defending three co-equal branches of government in the early days of our republic, as well as the pivotal role played by brave federal judges - deaf to public criticism - in defending the civil rights of all Americans. Judge Bell was an exceptional man, and working for him was one of the great honors and pleasures of my life.

One week to the day after our trip to Akron, Jessica and I flew to central Europe, where we spent 12 days sightseeing with my brother and his wife, both of whom work for the State Department at the U.S. Embassy in Slovakia. As we traveled through the former Czechoslovakia, we enjoyed Bratislava’s historic view of the Danube, Prague’s architectural splendor, and many happy respites over local beer, wine, and cuisine. Yet for all their old world charm, the Czech Republic and Slovakia both struggle to establish and embrace true western democracies after a legacy of imperialism and cold war communism. Corruption is rife at all stages of government, include the judiciary. Cynicism and despondency easily take root without a legacy of accountability to the rule of the law.

We face many challenges as a nation. But we can take pride in - and draw lessons from - the enduring nature of our Constitution and the ultimate victory of the rule of law. Even when we have gone astray (think of the Dred Scott decision or the Watergate scandal), law and order have prevailed in the end without sacrificing individual liberty. This legacy has been purchased and protected at a great price. Countless Americans have given a lifetime of public service, like Judge Bell, or have placed their own lives in harm’s way to protect that which we hold dear.

Traveling much closer to home, I attended the funeral service last week of George Baditoi. A World War II veteran, George returned to Michigan safely to embark on a distinguished sixty year career as a CPA and a tax attorney. Quietly, but on a daily basis, he exemplified the same model of hard work, intellect, and integrity in his private practice and on behalf of his clients that Judge Bell displayed in his court room. George was devoted to his clients, his family, his country and his God. He was a long and dear friend of Wright Penning & Beamer, and he will be sorely missed.

I have been blessed to know great men. In the cases of Judge Bell and George Baditoi, greatness lay in hard work, humility, and a firm belief in things bigger than self. May we all strive after such role models. May we answer when duty calls. May we cherish and defend the blessings of a free society, ordered and maintained by the rule of law.

Dirk A. Beamer