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Iowa Allows Medicaid Recovery Against Joint Tenancy Property

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APRIL 10, 2006  VOLUME 13, NUMBER 41

As many states have become more aggressive about recovering the costs of Medicaid care from the estates of deceased beneficiaries, one issue has appeared to be insoluble. Federal law permits states to make a claim against property held in joint tenancy at the time of a Medicaid recipient’s death. Property law principles in place for centuries, however, make it clear that a deceased joint tenant has no interest in the property. A recent case from the Iowa Supreme Court unsettles that long-standing concept.

Mary Serovy, a widow living in the family home where she and her late husband had raised their children, found that she could no longer get along on her own. She made a deal with her son and daughter-in-law; the younger couple would pay to build an addition on the house where they could live, and Ms. Serovy would transfer the property into joint tenancy with them. That way, all three of them figured, Ms. Serovy would have some help to allow her to stay at home, and the property would transfer to her son and daughter-in-law automatically at death.

The multi-generational arrangement worked well for almost a decade, but eventually Ms. Serovy could not stay at home any longer. She moved into a nursing home and, since she owned practically no assets other than her home, she quickly became eligible for Medicaid assistance. When she died less than a year later, in 1998, the Iowa Medicaid agency had paid $28,707.54 toward her care. Since her only asset—the house—transferred automatically on her death, no probate proceeding was required.

Five years later, the Medicaid agency decided it was time to make its claim against Ms. Serovy’s estate. It petitioned for appointment of an executor and asserted its right to sell the home and recover up to one-third of the proceeds. The probate court agreed with the agency, and ordered the home sold.

The Iowa Supreme Court reversed the sale order, but approved the claim against Ms. Serovy’s home. According to the justices, Iowa state law permits its Medicaid agency to assert a claim against joint tenancy property. If that authority is meaningless because a joint tenant’s interest is extinguished at death, then the Iowa statute would be meaningless. Since the courts assume that legislatures would not pass meaningless laws, the Iowa statute must mean that the state can claim the interest Ms. Serovy had just before her death.

Ms. Serovy’s son and daughter-in-law also made another argument. They insisted that the Iowa law should be ruled invalid because it would impair the contract entered into between them and Ms. Serovy. Not so, said the court—the contract only required Ms. Serovy to transfer the home into joint tenancy, and she had accomplished her part of that agreement even before the law went into effect. Nothing in her agreement with the younger couple required her to ensure that they receive the house outright at her death.

The probate court did err by ordering the sale of the property too quickly, however. The Supreme Court justices agreed that the Medicaid agency can take Ms. Serovy’s one-third interest in the property, but it must file a separate action to force sale of the home to satisfy its claim. Estate of Serovy, March 24, 2006.

Although this may be the first instance in which a state statute authorizing Medicaid recovery against joint tenancy property has been approved by any state’s highest court, it raises more questions than it answers. Why didn’t Ms. Serovy’s son and daughter-in-law qualify to receive the house outright under the federal provision permitting transfers of homes to a child who lives with the Medicaid recipient for two years prior to entry into the nursing home, and provides care that delays nursing home placement? Doesn’t Iowa’s hardship provision (mandated by federal law) afford Ms. Serovy’s son and daughter-in-law an opportunity to argue that sale of the residence would effectively throw them out of their own home? Why isn’t the state’s claim barred for its failure to pursue the matter for five years after Ms. Serovy’s death? All of these arguments may have been made in her case, but the Iowa Supreme Court holding does not address them.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

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Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.