Recent changes to Medicaid asset recovery laws in New York State have expanded the manner in which the State may engage in Medicaid estate recovery.   These changes may threaten existing asset protection plans, and will affect the way in which title companies clear title. The focus of the changes have been non-probate assets, including retained life estates, revocable living trusts and joint tenancies, which have been popular tools used for limiting Medicaid recovery by New York State. These types of transfers are now subject to estate recovery and may not be relied upon to shield the assets of Medicaid recipients.

Under prior law, an estate for recovery purposes was limited to property passing under a will or by intestacy. A transfer of a Medicaid recipient's interest that passed outside the probate process would be beyond the reach of the state. Common transfers included a conveyance by a recipient to (1) themselves and a relative as joint tenants with rights of survivorship; (2) trustees under a revocable trust; and (3) to relatives while retaining a life estate interest.   In each of these types of transfers, the recipient was divested of their interest in the property upon the recipient's death. Since title to the property passed automatically to the remainderman when the recipient died, no estate recovery could be had against the remainderman's interest. This is no longer the case.