South-Western Legal Studies in Business

Government Can Recover Funds from Estate That Were Transferred to Obtain Free Medical Care
Description North Dakota high court held that the government could sue to recover funds that were transferred as a gift so the donor could qualify for free Medicaid benefits. After the death of the donor, the government could have the transfer declared void and recover the money to pay for the medical care provided.
Topic Wills, Estates, and Trusts
Key Words Estate; Transfer of Assets; Creditors
C A S E   S U M M A R Y
Facts In 1996 Carl Bergman applied for Medicaid benefits. To qualify under the impoverished spouse rules, he transferred about $40,000 to his wife, Lucille, who opened an account in her name only. From 1996 until his death in 1998, Carl received over $31,000 in Medicaid benefits. Lucille was diagnosed with cancer in 2002; she transferred her money to her children and grandchildren before she died. The North Dakota Department of Human Services (DHS) sued the estate contending that the gifts from Lucille were void as the funds were transferred from Carl to Lucille as a way to receive Medicaid benefits rather than pay for Carl's medical care. The district court dismissed the suit. DHS appealed.
Decision

Reversed and remanded. DHS provided Medicaid benefits to Carl. Since it showed that he transferred funds to Lucille to become insolvent to obtain the benefits, that transfer, and then the transfer from Lucille to the children, were void. DHS is authorized under the Social Security Act to act as a creditor and to trace the transfer of such funds and to claim them from the estate.

Citation Estate of Bergman, 688 N.W.2d 187 (Sup. Ct., N.D., 2004)

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