What steps are involved in a Medicaid estate recovery claim against inherited property in AZ? | Arizona Probate

Detailed Answer

In Arizona, the state Department of Economic Security (DES) or the Attorney General’s office may pursue a Medicaid estate recovery claim against assets—including inherited property—after a beneficiary’s death. The process generally follows these steps:

Identification and Preliminary Notice
DES reviews recipient records and identifies estates subject to recovery under A.R.S. §36-2954. Within 60 days of appointment of a personal representative, DES must send a written notice of its claim. A.R.S. §36-2954(A).
Filing a Claim in Probate
DES files a statement of claim in the probate proceeding for the decedent’s estate. Under A.R.S. §14-3803, the claim must be filed within one year of the personal representative’s appointment. A.R.S. §14-3803.
Service of Process on Heirs
DES must serve all known heirs and devisees with a copy of the claim in accordance with A.R.S. §14-3408. This gives heirs notice and an opportunity to respond. A.R.S. §14-3408.
Valuation of Inherited Property
The probate court or appraiser sets the fair-market value as of the date of death. See A.R.S. §14-3608 for appraisal procedures. A.R.S. §14-3608.
Application of Homestead and Other Exemptions
Certain exemptions may protect part of the property value from recovery. For example, the surviving spouse’s homestead exemption under A.R.S. §33-1101 may reduce the recoverable amount. A.R.S. §33-1101.
Heir Objections and Hardship Waiver Requests
Heirs have 30 days to object to the claim. They may also request a waiver or reduction for undue hardship under federal law (42 U.S.C. §1396p(b)(3)(A)). The state reviews hardship waivers on a case-by-case basis.
Settlement and Final Order
If no objection arises—or after objections resolve—the court enters a final order approving distribution. The estate pays the agreed-upon claim balance from available assets, including net proceeds from inherited property.

Helpful Hints

Gather all estate documents early: wills, trust instruments, and property deeds.
Monitor probate deadlines closely—missing the one-year claim deadline can bar recovery.
Understand homestead and exemption rules to limit recovery amounts.
File hardship waiver requests promptly if full payment would cause undue hardship.
Consider negotiating a payment plan to reduce immediate financial strain on heirs.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.