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Medicaid Recipient’s Annuity Was Not Subject to Claim Against Estate for Funeral Expenses

An Iowa appeals court rules that the remaining balance on a deceased Medicaid recipient’s annuity became the property of the state as the primary beneficiary and could not be subject to a claim against the estate by a funeral home. In the Matter of the Estate of Jordan v. Iowa Medicaid Enterprise Recovery Program (Iowa Ct. App., No. 18-0590, Jan. 9, 2019).

When Jill Jordan applied for Medicaid, she purchased an annuity and named the state as the primary beneficiary. After Ms. Jordan died, the insurer transferred the remaining balance of the annuity to the state. Ms. Jordan’s will was probated, and a funeral home filed a claim against the estate for burial expenses.

The estate lacked funds to cover the funeral expenses, so the executor filed a petition for declaratory judgment to include the annuity in the estate. The executor argued that the annuity contract is void because it violates clear public policy on priority of payment of claims. State law ranks funeral and burial expenses above medical assistance debt. The trial court granted the state summary judgment, and the estate appealed.

The Iowa Court of Appeals affirms, holding that the annuity was not subject to claims against the estate. The court rules that when Ms. Jordan died, the remaining annuity balance became the personal property of the state as the primary beneficiary, so “the balance was never a probate asset subject to [state probate law].”

For the full text of this decision, go to: https://www.iowacourts.gov/courtcases/4392/embed/CourtAppealsOpinion

To determine the best way for your family to provide care, consult with one of our elder law attorneys at Pearson Bollman Law.

This article was reprinted with the permission of ElderLawAnswers.com.  If you have any questions regarding the material in this article and how it applies to you, please contact Pearson Bollman Law at (515) 298-8850.