Opinion ID: 1657412
Heading Depth: 1
Heading Rank: 4

Heading: Is Ruby's Life Estate Includable in Her Probate Estate For Purposes of Payment of the Debt Owed to the Department?

Text: The department contends that Ruby's life estate must be included in her probate estate under the original 1994 version of section 249A.5(2)( c ) and under the amended 2002 version. The administrator argues that neither version can be constitutionally applied, and if they do apply, the original statute did not encompass life estates. The administrator's constitutional defense is addressed below. As for the question of which version of the statute controls or whether both apply, we need not decide that issue because we conclude that under either statute Ruby's life estate in the real estate transferred to Charles must be included in her probate estate. Section 249A.5(2)( c ) as originally enacted defined the estate of a medical assistance recipient to include any real property... in which the recipient ... had any ... interest at the time of the recipient's ... death, to the extent of such interests, including but not limited to interests in jointly held property and interests in trusts. Iowa Code § 249A.5(2)( c ) (1995). Whether Ruby, at the time of her death, had an interest in the real property at issue here is determined as of a point in time immediately before her death. See In re Barkema Trust, 690 N.W.2d 50, 56 (Iowa 2004) (holding the phrase `at the time of death' means the time immediately before the Medicaid recipient's death). Immediately prior to her death, Ruby held a life estate in 338 acres of land. For reasons that follow, we hold her life estate constituted an interest in real property within the meaning of section 249A.5(2)( c ). When this court was called upon to interpret section 249A.5(2)( c ) in Barkema Trust, we concluded the legislature clearly intended to define `estate' broadly, and to include more than legal title, because it defined [`estate'] to include any `legal title or interest. ' Id. at 55 (quoting Iowa Code section 249A.5(2)( c ) (2003)). Iowa law has long recognized a life estate in real estate as an interest in that property. See Beeman v. Stilwell, 194 Iowa 231, 237, 189 N.W. 969, 971 (1922) (stating [a]n estate for life is a freehold interest in land). Moreover, it is an interest distinct from and independent of the remainder. See Holzhauser v. Iowa State Tax Comm'n, 245 Iowa 525, 535, 62 N.W.2d 229, 235 (1953). Therefore, Ruby had an interest in the farm immediately prior to her death, and that interest  her life estate  was includable in her probate estate under the original version of section 249A.5(2)( c ). As for the 2002 version of section 249A.5(2)( c ), it specifically includes retained life estates in the deceased recipient's estate. Moreover, Ruby's life estate falls within the statutory definition of retained life estate because it was created by Ruby, the recipient, and Ruby held an interest in the farm  fee title  at the time she created the life estate. See Iowa Code § 249A.2(11) (2003) (defining retained life estate in part as [a] life estate created by the recipient ... in which ... the recipient ... held any interest in the property at the time of the creation of the life estate). Thus, the district court correctly ruled that section 249A.5(2)( c ) required that Ruby's life estate be included in her probate estate for purposes of satisfying her debt to the department. Cf. In re Estate of Gullberg, 652 N.W.2d 709, 713 (Minn.Ct.App. 2002) (holding Minnesota's estate recovery statute required that recipient's interest in real property owned by his wife must be included in his estate for purposes of Medicaid reimbursement). The administrator contends this conclusion contravenes federal law. He relies on a provision in the act that amended federal law governing eligibility for Medicaid benefits. See Omnibus Budget Reconciliation Act of 1993, Pub.L. No. 103-66, § 13611(e), 107 Stat. 312, 627 (1993). Section 13611(e) provided that [t]he amendments made by this section shall not apply ... with respect to assets disposed of on or before the date of the enactment of this Act. Id. § 13611(e)(2)(B), 107 Stat. at 627 (emphasis added). That date was August 10, 1993. This restriction did not apply to the amendments relating to Medicaid estate recovery, however, because those amendments were in a different section of the act. See id. § 13612, 107 Stat. at 627 (amending statutes pertaining to Medicaid estate recovery). We also reject an argument by the administrator that this issue is controlled by Iowa's probate code. The administrator argues probate law does not include a decedent's life estate in the probate estate and does not permit the administrator to pay claims from other than estate assets. See Iowa Code §§ 633.3(15) (defining estate as the real and personal property of a decedent), 633.410-.450 (providing for payment of claims, debts, and charges against decedent's estate). In contrast, the estate recovery statute provides that  [f]or purposes of collection of a debt created by [section 249A.5(2)], all assets included in the estate of a medical assistance recipient ... pursuant to [section 249A.5(2)( c )] are subject to probate.  Iowa Code § 249A.5(2)( d ) (emphasis added). Thus, the general probate laws do not apply because there is a specific law that addresses the particular matter at issue. See Iowa Code § 4.7 (providing when irreconcilable conflict between general and special provisions exists, special provision prevails as an exception to the general provision). In addition, as this court noted in Barkema Trust, Iowa chose to define estate more broadly than required by federal law, including assets that would not otherwise be included within a recipient's estate under state probate law. Barkema Trust, 690 N.W.2d at 55. Therefore, Iowa probate law does not control the determination of assets includable in a recipient's estate for purposes of satisfying a Medicaid debt. We now consider the administrator's constitutional defense.