SB384: Bill Text

Property subject to estate recovery

Current law defines the property that is subject to estate recovery as all real and personal property to which the individual who received the recoverable public assistance benefits under a public assistance program (recipient) held any legal title or in which the recipient had any legal interest immediately before death, including assets transferred to an heir or a survivor through jointly owned property, a living trust, or other specified arrangements. In addition, the property subject to estate recovery includes any real or personal property in which the recipient's surviving spouse had an ownership interest at the recipient's death and in which the recipient had a marital property interest with that spouse at any time within five years before the recipient applied for the public assistance program or during the time that the recipient was eligible for the public assistance program. The bill limits the property that is subject to estate recovery to all real and personal property to which the recipient held any legal title or in which the recipient had any legal interest immediately before death, including assets transferred to an heir or a survivor through the specified arrangements, and removes from the definition of property that is subject to estate recovery any real or personal property in which the recipient's surviving spouse had any ownership interest at the recipient's death and in which the recipient had a marital property interest with that spouse at any time within five years before the recipient applied for the public assistance program or during the time that the recipient was eligible for the public assistance program.

Current law provides that there is a presumption, which may be rebutted with clear and convincing evidence, that all nonprobate property, and all property in the estate, of the recipient's deceased spouse who survived the recipient was marital property held with the recipient and that 100 percent of that property is subject to estate recovery by DHS. The bill provides that there is a presumption, consistent with the statutes relating to the classification of the property of spouses, which may be rebutted, that all nonprobate property, and all property in the estate, of the recipient's deceased surviving spouse was marital property held with the recipient and that 100 percent of that property is subject to estate recovery by DHS.

Voidable transfers

Current law provides that certain transfers of real property are voidable by DHS in court actions, in which case title to the real property reverts to the grantor or his or her estate. A voidable transfer is one that satisfies all of the following criteria: the transfer was made by a grantor who was receiving or who received MA; the transfer was made while the grantor was eligible for MA; DHS was unaware of the transfer; and the transfer was made to hinder, delay, or defraud DHS from recovering MA paid on behalf of the grantor. Current law provides that there is a rebuttable presumption that any "fraudulent transfer" was made to hinder, delay, or defraud DHS from recovering MA if the transfer was made by a grantor who was receiving or who received MA and while the grantor was eligible for MA. Current law defines a "fraudulent transfer" as one in which the property was transferred for less than fair market value or one in which the deed or other conveyance was not recorded during the lifetime of the grantor. JCF did not approve the implementation of these voidable transfer provisions and the bill repeals them.

Interests in property and notices of encumbrance

Current law establishes procedures for DHS to follow with respect to real property owned by a recipient, both before and after death. Whenever a recipient, upon becoming eligible for a public assistance program or during the time that the recipient is eligible for a public assistance program, has a current ownership interest in real property, or has a spouse with a current ownership interest in real property in which the recipient had a marital property interest with that spouse at any time within the five years before the recipient applied for the public assistance program or during the time that the recipient is eligible for the public assistance program, DHS may record a document with respect to the property, which requires any person intending to transfer title to, encumber, or terminate an interest in the property to notify DHS. JCF did not approve the implementation of the provisions establishing these procedures and the bill repeals them.

Trusts

Current law requires trustees of living trusts to notify DHS, within 30 days after the death of the trust settlor and before any assets are distributed, if the trust settlor, or his or her predeceased spouse, received any recoverable public assistance benefits. If DHS sends the trustee a claim for the estate recovery of recoverable public assistance benefits, the trustee must, within 90 days, pay DHS the recoverable amount or provide DHS with information about any property that was distributed and to whom it was distributed. Current law requires a trustee of a special needs or pooled trust, the beneficiaries of which receive MA, to provide notice to DHS within 30 days after the death of a trust beneficiary, and to repay DHS, within 90 days after receiving a claim from DHS, for the amount of MA paid on behalf of the beneficiary. If the trustee fails to comply with the notice or repayments requirements, the trustee is personally liable to DHS for any MA amounts paid on behalf of the beneficiary that DHS is unable to recover. Current law also provides that, after the death of a beneficiary under a pooled trust, the trustee may retain up to 30 percent of the balance in the deceased beneficiary's account, unless the trustee failed to comply with the notice and repayment requirements, in which case the trustee may not retain any of the balance in the deceased beneficiary's account. JCF did not approve the implementation of these trust and trustee provisions and the bill repeals them.

Hardship waiver

Under current law, DHS may promulgate rules that establish standards for determining whether the application of estate recovery would work a hardship in an individual case. DHS must waive the application of estate recovery in a particular case if it would work an undue hardship, except for estate recovery with respect to a recipient's deceased surviving spouse. The bill removes this exception so that DHS is required to waive the application of estate recovery against the nonprobate property and estate of a recipient's deceased surviving spouse, also, if estate recovery would work an undue hardship in that case.

Divestment and asset verification

Under the law previous to the effective date of Act 20, with certain exceptions, if an institutionalized, or noninstitutionalized, individual or his or her spouse transfers assets for less than fair market value on or after a specific date the individual is ineligible for certain MA services for a specified period of time. Current law, under Act 20, specified that an eligibility period applies for an institutionalized or noninstitutionalized individual regardless of whether the assets transferred for less than fair market value are considered excluded assets, if retained, under federal law. JCF did not approve the implementation of this change in Act 20 and the bill repeals the change.

Under the law previous to the effective date of Act 20, the purchase by an individual or his or her spouse of a promissory note, loan, or mortgage is a transfer of assets for less than fair market value triggers an ineligibility period unless certain circumstances apply including that the loan's terms prohibit cancellation of the balance upon the death of the lender. Current law, under Act 20, specifies that a promissory note in which the debtor is a presumptive heir of the lender or in which neither the lender nor debtor has any incentive to enforce repayment is considered cancelled upon the death of the lender for purposes of divestment and eligibility for MA. JCF did not approve the implementation of this change in Act 20 and the bill repeals the change.

Act 20 changes the definition of "financial institutions" for purposes of verifying the assets of applicants for and recipients of MA programs. The bill removes from that definition institution-affiliated parties of depository institutions and credit unions, as institutional-affiliated parties are defined under federal law; benefit associations; insurance companies; safe deposit companies; money market mutual funds; and similar entities authorized to do business in Wisconsin.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB384,1 Section 1. 20.435 (4) (im) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,14,12 20.435 (4) (im) Medical assistance; correct payment recovery; collections; other recoveries. All moneys received from the recovery of correct medical assistance payments under ss. 49.496, 49.848, and 49.849, all moneys received as collections and other recoveries from providers, drug manufacturers, and other 3rd parties under medical assistance performance-based contracts, and all moneys credited to this appropriation account under s. 49.89 (7) (f), for payments to counties and tribal governing bodies under s. 49.496 (4) (a), for payment of claims under s. 49.849 (5), for payments to the federal government for its share of medical assistance benefits recovered, for the state share of medical assistance benefits provided under subch. IV of ch. 49, and for costs related to collections and other recoveries.

SB384,2 Section 2. 20.435 (4) (in) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,15,2 20.435 (4) (in) Community options program; family care; recovery of costs administration. From the moneys received from the recovery of costs of care under ss. 46.27 (7g), 49.848, and 49.849 for enrollees who are ineligible for medical assistance, the amounts in the schedule for administration of the recovery of costs of the care.

SB384,3 Section 3. 20.435 (7) (im) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,15,15 20.435 (7) (im) Community options program; family care benefit; recovery of costs; birth to 3 waiver administration. From the moneys received from the recovery of costs of care under ss. 46.27 (7g), 49.848, and 49.849 for enrollees who are ineligible for medical assistance, all moneys not appropriated under sub. (4) (in), and all moneys transferred to this appropriation account from the appropriation account under sub. (4) (o), for payments to county departments and aging units under s. 46.27 (7g) (d), payments to care management organizations for provision of the family care benefit under s. 46.284 (5), payment of claims under s. 49.849 (5), payments for long-term community support services funded under s. 46.27 (7) as provided in ss. 46.27 (7g) (e) and 49.849 (6) (b), and for administration of the waiver program under s. 46.99.

SB384,4 Section 4. 23.0918 (2) of the statutes is amended to read:

SB384,15,23 23.0918 (2) Unless the natural resources board determines otherwise in a specific case, only the income from the gifts, grants, or bequests in the fund is available for expenditure. The natural resources board may authorize expenditures only for preserving, developing, managing, or maintaining land under the jurisdiction of the department that is used for any of the purposes specified in s. 23.09 (2) (d). In this subsection, unless otherwise provided in a gift, grant, or bequest, principal and income are determined as provided under s. 701.20 subch. XI of ch. 701.

SB384,5 Section 5. 25.70 of the statutes is amended to read:

SB384,16,8 25.70 Historical society trust fund. There is established a separate nonlapsible trust fund designated as the historical society trust fund, consisting of all endowment principal and income and all cash balances of the historical society. Unless the board of curators of the historical society determines otherwise in each case, only the income from the assets in the historical society trust fund is available for expenditure. In this section, unless otherwise provided in the gift, grant, or bequest, principal and income are determined as provided under s. 701.20 subch. XI of ch. 701.

SB384,6 Section 6. 46.27 (7g) (a) 5. a. of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 46.27 (7g) (a) 5.

SB384,7 Section 7. 46.27 (7g) (a) 5. b. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,8 Section 8. 46.27 (7g) (c) 2m. b. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,16,19 46.27 (7g) (c) 2m. b. There is a presumption, which may be rebutted by clear and convincing evidence consistent with s. 766.31, which may be rebutted, that all property in the estate of the nonclient surviving spouse was marital property held with the client and that 100 percent of the property in the estate of the nonclient surviving spouse is subject to the department's claim under subd. 1.

SB384,9 Section 9. 46.27 (7g) (c) 6m. b. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,16,23 46.27 (7g) (c) 6m. b. The department shall release the lien in the circumstances described in s. 49.848 (5) (f) 49.849 (4) (c) 2.

SB384,10 Section 10. 46.27 (7g) (g) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,17,6 46.27 (7g) (g) The department shall promulgate rules establishing standards for determining whether the application of this subsection would work an undue hardship in individual cases. If the department determines that the application of this subsection would work an undue hardship in a particular case, the department shall waive application of this subsection in that case. This paragraph does not apply with respect to claims against the estates of nonclient surviving spouses.

SB384,11 Section 11. 46.286 (7) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,17,12 46.286 (7) Recovery of family care benefit payments. The department shall apply to the recovery from persons who receive the family care benefit, including by liens and affidavits and from estates, of correctly paid family care benefits, the applicable provisions under ss. 49.496, 49.848, and 49.849.

SB384,12 Section 12. 49.45 (4m) (a) 3. b. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,13 Section 13. 49.45 (4m) (a) 3. d. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,14 Section 14. 49.45 (4m) (a) 3. e. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,15 Section 15. 49.453 (2) (a) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,18,2 49.453 (2) (a) Institutionalized individuals. (intro.) Except as provided in sub. (8), if an institutionalized individual or his or her spouse, or another person acting on behalf of the institutionalized individual or his or her spouse, transfers assets; regardless of whether those assets, if retained, are excluded under 42 USC 1396p; for less than fair market value on or after the institutionalized individual's look-back date, the institutionalized individual is ineligible for medical assistance for the following services for the period specified under sub. (3):

SB384,16 Section 16. 49.453 (2) (b) (intro.) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,18,11 49.453 (2) (b) Noninstitutionalized individuals. (intro.) Except as provided in sub. (8), if a noninstitutionalized individual or his or her spouse, or another person acting on behalf of the noninstitutionalized individual or his or her spouse, transfers assets; regardless of whether those assets, if retained, are excluded under 42 USC 1396p; for less than fair market value on or after the noninstitutionalized individual's look-back date, the noninstitutionalized individual is ineligible for medical assistance for the following services for the period specified under sub. (3):

SB384,17 Section 17. 49.453 (4c) (c) of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,18 Section 18. 49.496 (1) (cm) 1. of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 49.496 (1) (cm).

SB384,19 Section 19. 49.496 (1) (cm) 2. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,20 Section 20. 49.496 (3) (aj) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,18,24 49.496 (3) (aj) 2. There is a presumption, which may be rebutted by clear and convincing evidence consistent with s. 766.31, which may be rebutted, that all property in the estate of a nonrecipient surviving spouse was marital property held with the recipient and that 100 percent of the property in the estate of the nonrecipient surviving spouse is subject to the department's claim under par. (a).

SB384,21 Section 21. 49.496 (3) (dm) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,19,4 49.496 (3) (dm) 2. The department shall release the lien in the circumstances described in s. 49.848 (5) (f) 49.849 (4) (c) 2.

SB384,22 Section 22. 49.496 (6m) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,19,13 49.496 (6m) Waiver due to hardship. The department shall promulgate rules establishing standards for determining whether the application of this section would work an undue hardship in individual cases. If the department determines that the application of this section would work an undue hardship in a particular case, the department shall waive application of this section in that case. This subsection does not apply with respect to claims against the estates of nonrecipient surviving spouses.

SB384,23 Section 23. 49.4962 of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,24 Section 24. 49.682 (1) (e) 1. of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 49.682 (1) (e).

SB384,25 Section 25. 49.682 (1) (e) 2. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,26 Section 26. 49.682 (2) (bm) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,20,2 49.682 (2) (bm) 2. There is a presumption, which may be rebutted by clear and convincing evidence consistent with s. 766.31, which may be rebutted, that all property in the estate of the nonclient surviving spouse was marital property held with the client and that 100 percent of the property in the estate of the nonclient surviving spouse is subject to the department's claim under par. (a).

SB384,27 Section 27. 49.682 (2) (fm) 2. of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,20,6 49.682 (2) (fm) 2. The department shall release the lien in the circumstances described in s. 49.848 (5) (f) 49.849 (4) (c) 2.

SB384,28 Section 28. 49.682 (5) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,20,14 49.682 (5) The department shall promulgate rules establishing standards for determining whether the application of this section would work an undue hardship in individual cases. If the department determines that the application of this section would work an undue hardship in a particular case, the department shall waive application of this section in that case. This subsection does not apply with respect to claims against the estates of nonclient surviving spouses.

SB384,29 Section 29. 49.848 of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,30 Section 30. 49.849 (1) (d) 1. of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 49.849 (1) (d).

SB384,31 Section 31. 49.849 (1) (d) 2. of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,32 Section 32. 49.849 (2) (c) of the statutes, as created by 2013 Wisconsin Act 20, is amended to read:

SB384,21,2 49.849 (2) (c) There is a presumption, which may be rebutted by clear and convincing evidence consistent with s. 766.31, which may be rebutted, that all property of the deceased nonrecipient surviving spouse was marital property held with the recipient and that 100 percent of the property of the deceased nonrecipient surviving spouse is subject to the department's claim under par. (a).

SB384,33 Section 33. 49.849 (4) (c) 2. of the statutes, as created by 2013 Wisconsin Act 20, is renumbered 49.849 (4) (c) 2. (intro.) and amended to read:

SB384,21,6 49.849 (4) (c) 2. (intro.) The department shall release the lien in the circumstances described in s. 49.848 (5) (f). if any of the following applies:

SB384,34 Section 34. 49.849 (4) (c) 2. a. of the statutes is created to read:

SB384,21,10 49.849 (4) (c) 2. a. The recipient's surviving spouse or child who is under age 21 or disabled sells the property for fair market value, as described in sub. (5c) (d), during the spouse's or child's lifetime.

SB384,35 Section 35. 49.849 (4) (c) 2. b. of the statutes is created to read:

SB384,21,18 49.849 (4) (c) 2. b. The recipient's surviving spouse or child who is under age 21 or disabled transfers the property for less than fair market value, as described in sub. (5c) (d), during the spouse's or child's lifetime, the transferee sells the property during the spouse's or child's lifetime and places proceeds equal to the lesser of the department's lien or the sale proceeds due to the seller in a trust or bond, and the department is paid the secured amount upon the death of the recipient's spouse or disabled child or when the recipient's child who is not disabled reaches age 21.

SB384,36 Section 36. 49.849 (4) (c) 2. c. of the statutes is created to read:

SB384,22,2 49.849 (4) (c) 2. c. The surviving owner or transferee of the property, who is not the recipient's surviving spouse or child who is under age 21 or disabled, sells the property during the lifetime of the recipient's surviving spouse or child who is under age 21 or disabled and places proceeds equal to the lesser of the department's lien or the sale proceeds due to the seller in a trust or bond, and the department is paid the secured amount upon the death of the recipient's spouse or disabled child or when the recipient's child who is not disabled reaches age 21.

SB384,37 Section 37. 49.849 (7) of the statutes, as affected by 2013 Wisconsin Act 20, is amended to read:

SB384,22,11 49.849 (7) Rules for hardship waiver. The department shall promulgate rules establishing standards to determine whether the application of this section would work an undue hardship in individual cases. If the department determines that the application of this section would work an undue hardship in a particular case, the department shall waive the application of this section in that case. This subsection does not apply with respect to collecting from the property of a decedent if the decedent is a deceased nonrecipient surviving spouse.

SB384,38 Section 38. 59.43 (1) (w) of the statutes, as created by 2013 Wisconsin Act 20, is repealed.

SB384,39 Section 39. 223.07 (3) of the statutes is amended to read:

SB384,23,20 223.07 (3) If the depository institution at which a trust service office is to be established has exercised trust powers, the trust company bank and the depository institution shall enter into an agreement respecting those fiduciary powers to which the trust company bank shall succeed and shall file the agreement with the division. The trust company bank shall cause a notice of the filing, in a form prescribed by the division, to be published as a class 1 notice, under ch. 985, in the city, village or town where the depository institution is located. After filing and publication, the trust company bank establishing the office shall, as of the date the office first opens for business, without further authorization of any kind, succeed to and be substituted for the depository institution as to all fiduciary powers, rights, duties, privileges, and liabilities of the depository institution in its capacity as fiduciary for all estates, trusts, guardianships, and other fiduciary relationships of which the depository institution is then serving as fiduciary, except as may be otherwise specified in the agreement between the trust company bank and the depository institution. The trust company bank shall also be deemed named as fiduciary in all writings, including, but not limited to, wills, trusts, court orders, and similar documents and instruments naming the depository institution as fiduciary, signed before the date the trust office first opens for business, unless expressly negated by the writing or otherwise specified in the agreement between the trust company bank and the depository institution. On the effective date of the substitution, the depository institution shall be released and absolved from all fiduciary duties and obligations under such writings and shall discontinue its exercise of trust powers on all matters not specifically retained by the agreement. This subsection does not effect a discharge in the manner of s. 701.16 (6) if required by a court under s. 701.0201 (1) or other applicable statutes and does not absolve a depository institution exercising trust powers from liabilities arising out of any breach of fiduciary duty or obligation occurring prior to the date the trust service office first opens for business at the depository institution. This subsection does not affect the authority, duties, or obligations of a depository institution with respect to relationships which may be established without trust powers, including escrow arrangements, whether the relationships arise before or after the establishment of the trust service office.

SB384,40 Section 40. 223.105 (1) (c) of the statutes is amended to read:

SB384,23,23 223.105 (1) (c) "Trustee" has the meaning designated in s. 701.01 (8) 701.0103 (28).

SB384,41 Section 41. 445.125 (1) (a) 1. of the statutes is amended to read:

SB384,24,14 445.125 (1) (a) 1. Except as provided in sub. (3m), whenever a person, referred to in this subsection as the depositor, makes an agreement with another person selling or offering for sale funeral or burial merchandise or services, referred to in this subsection as the beneficiary, for the purchase of a casket, outer burial container not preplaced into the burial excavation of a grave, combination casket-outer burial container or other receptacle not described in sub. (4) (b) (a) 2. for the burial or other disposition of human remains or for the furnishing of funeral or burial services, either of which is intended to be provided for the final disposition of the body of a person, referred to in this subsection as the potential decedent, wherein the use of such personal property or the furnishing of such services is not immediately required, all payments made under the agreement shall be and remain trust funds, including interest and dividends if any, until occurrence of the death of the potential decedent, unless the funds are sooner released upon demand to the depositor, after written notice to the beneficiary.

SB384,42 Section 42. 445.125 (1) (a) 2. of the statutes is amended to read:

SB384,24,18 445.125 (1) (a) 2. Notwithstanding s. 701.12 (1), such Such agreements may be made irrevocable as to the first $3,000 of the funds paid under the agreement by each depositor.

SB384,43 Section 43. 445.125 (4) of the statutes is renumbered 445.125 (4) (a).