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Be Very Careful!

It sounds almost too good to be true! A Beneficiary Deed is a legal document that passes title to your named beneficiary upon your death automatically without probate. It works a lot like a POD (Payable On Death) account that you may have at your bank. The second you die, your money in the POD account passes automatically and immediately to the person you named.

A beneficiary deed works much the same way. Upon death, your house or land passes automatically and immediately to the named beneficiary listed on the deed.

Potential Issues that may come with a Beneficiary Deed

So what’s the problem. A beneficiary deed sounds perfect in every way, right? Well almost.

In the scheme of things, the Beneficiary Deed law in Arkansas is relatively new. It has also been substantially modified earlier this year. Before the recent revision, the law stated that a beneficiary deed was subject to Section 1 (B) (i)(b) a claim for reimbursement of federal or state benefits by the Department of Human Services from the estate of the grantor of the beneficiary deed under A.C.A. § 20-76-436

This last stricken-through sentence was the “recoupment” provision that allowed DHS to recoup (get their money back) against an estate of a Medicaid Beneficiary.

So if Momma received Medicaid benefits while she was in the nursing home, and left her home to you via Beneficiary Deed, the transfer was subject to recoupment.

2021 Changes

It seems that the Arkansas legislature wanted to soften the blow of this draconian measure by passage of the new revisions.

In Section 2 of the revisions, it states that …”services rendered shall upon the death of the recipient constitute a debt to be paid.”

In other words, it seems that if your Mom or Dad received Medicaid benefits, the state can still file a lien against the estate and this amount of Medicaid benefits paid can still be considered a “debt to be paid”.

What Does All of This Mean?

That’s a good question. Like with all new laws, the real meaning is subject to judicial interpretation. This means that some people will have to try it, be challenged by DHS, then go to Court and get a ruling. Once this happens several times over a period of several years, maybe we will know exactly what this does mean. OR the legislature may try again to modify the law in another attempt to clean up their language in an attempt to iron out some of the potential issues.

In the meantime, just be careful. Before you print off a Beneficiary Deed form and fill it out, it would be a really good idea to have a discussion with your attorney to see if this is a good idea in your particular situation.

Read About Beneficiary Deed Law Yourself

If you are a glutton for punishment (like me) and want to read about it, the beneficiary deed law is at A.C.A. § 18-12-608 and the 2021 revisions can be found at the links on the Arkansas State Legislature page as Act 570 of the Acts of Arkansas. If you have trouble going to sleep tonight, I highly suggest either passage – you’ll be out like a light in a matter of minutes!

Best wishes to you and your family as you work to do the necessary planning for your family.

FREE Phone Consultation

We work with people to do various types of estate planning. There is no one size fits all plan and no plan is categorically better than others. The key is to meet with your attorney (hopefully us!) to discuss your unique situation and have a plan crafted that is best for you. If you or your declining parent does not yet have a Power of Attorney in place, please be proactive and give us a call before you (or they) lose capacity.

Without a properly flexible plan, how will you care for your declining Loved One, be there for your family, get work done, and pivot in the event of a crisis? What about cost? How will you pay for it all? If you make the Assisted Living Facility choice, how long will the money last? Together, we can craft a proactive plan! Lets get started protecting your assets!

We are currently offering a FREE 10-Minute Phone Consultation with one of our Elder Law professionals. You can get a jump start on planning as we work together so you don’t need to attempt DIY Estate Planning.

Arkansas Newsletter

If you, or someone you know, are from Arkansas and would benefit from more information like this, be sure to sign up for our free Arkansas Newsletter by going to https://elp.legal/arknews.

ELP YouTube Channel

Speaking of trends, subscribe to our YouTube Channel. We have a few hundred videos there for your watching enjoyment (We even have a beneficiary deed video). Our videos are categorized by playlist. You should easily be able to find several videos that discuss exactly what you are looking for. The best part about this is not only is this some really good content, but it is free! There’s even a video specifically about a Revocable Living Trust!

Just click here to go to The Elder Law Practice You Tube Channel. Please remember to subscribe! When you click the notification bell, so you will be notified of our latest video launches. If you have video ideas, please type them in the comment box. Thanks for watching!

Disclaimer

We have covered some legal topics in this edition and as always, I want to emphasize that (1) the law is different in every state, so if you live in a state other than Arkansas, just know that the law may be totally different in your state; (2) your situation is unique, so one size doesn’t fit all – meaning what we discuss herein may not be right for you; (3) we have purposely over-simplified many of the topics above (otherwise this would be many pages long and unreadable because of all of the legalize). It is imperative that you meet with your attorney (hopefully us!) and get a plan that will work for you. Please don’t attempt DIY Estate Planning based on what you read in this (or any) article AND don’t try to go it alone. Please consider this, get your questions answered and take action.

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