Q: My late uncle was in a nursing home in New York State for about a year. They were applying for Medicaid, but he died before they finalized the Medicaid process. He left many bills, and a residence valued at about $40,000. He also left a bank account with about $30,000 in trust for me. Is that money mine, or will the nursing home or Medicaid come looking for it?
A: Medicaid isn’t one of your uncle’s creditors if the Medicaid application process was never completed. But everyone else he owed money to – including the nursing home -- definitely has a claim on his estate.
Your uncle's estate must pay his outstanding bills before any assets are distributed to his heirs.
To be sure, New York law does make some assets off limits to most creditors: They can’t touch the proceeds of life insurance policies, or collect from annuities or retirement accounts that have designated beneficiaries. If your uncle had named you as his IRA beneficiary, you could be confident of inheriting that account.
But a bank ‘in trust for’ account isn’t on the list of protected assets. Your uncle’s creditors have first dibs on it. Depending on how much he owed that nursing home, there may be nothing left for you.
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