SENATE BILL NO. 1419

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S1419................................................by JUDICIARY AND RULES
HOMESTEAD ALLOWANCE - Adds to and repeals existing law relating to exempt
property and allowances to remove a reference to the family allowance; to
revise the determination and amount of the homestead allowance; to remove
certain circumstances qualifying a surviving spouse for a homestead
allowance; to revise terminology; to provide a homestead allowance for
certain minor and disabled children; to remove certain circumstances
qualifying such minor and disabled children for a homestead allowance; to
provide for an allowance for certain tangible personal property; to remove
provisions dealing with encumbered chattels and deficiencies of exempt
property; to remove a provision for a certain lump sum family allowance; to
remove a provision permitting a personal representative or certain
interested persons to petition the court for a certain family allowance; to
provide for limitations on exempt property and homestead allowance by will;
and to remove provisions dealing with petitioning the court for an exempt
property allowance claim under certain circumstances.

02/11    Senate intro - 1st rdg - to printing
02/12    Rpt prt - to Jud
02/19    Rpt out - rec d/p - to 2nd rdg
02/20    2nd rdg - to 3rd rdg
02/21    3rd rdg - PASSED - 31-0-4
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Cameron,
      Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
      Lodge, Malepeai(Sagness), McKenzie, Pearce, Richardson, Schroeder,
      Siddoway, Stegner, Werk
      NAYS -- None
      Absent and excused -- Burkett, McGee, McKague, Stennett
    Floor Sponsor - Davis
    Title apvd - to House
02/22    House intro - 1st rdg - to Jud
03/06    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/12    3rd rdg - PASSED - 68-0-2
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
      Chavez, Chew, Clark, Collins, Crane, Durst, Eskridge, Hagedorn, Hart,
      Harwood, Henbest, Henderson, Jaquet, Killen, King, Labrador, Lake,
      LeFavour, Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer,
      Moyle, Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould,
      Ringo, Roberts, Rusche, Sayler, Schaefer, Shepherd(02), Shepherd(08),
      Shirley, Shively, Smith(30), Smith(24), Snodgrass, Stevenson, Thayn,
      Thomas, Trail, Vander Woude, Wills, Wood(27), Wood(35), Mr. Speaker
      NAYS -- None
      Absent and excused -- Kren, Ruchti
    Floor Sponsor - Wills
    Title apvd - to Senate
03/13    To enrol - Rpt enrol - Pres signed
03/14    Sp signed
03/17    To Governor
03/18    Governor signed
         Session Law Chapter 182
         Effective: 07/01/08

Bill Text




                                                                       
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   Second Regular Session - 2008

                                                                       

                                       IN THE SENATE

                                    SENATE BILL NO. 1419

                              BY JUDICIARY AND RULES COMMITTEE

  1                                        AN ACT
  2    RELATING TO EXEMPT PROPERTY AND ALLOWANCES; AMENDING SECTION  15-2-401,  IDAHO
  3        CODE,  TO  REMOVE  A  REFERENCE  TO THE FAMILY ALLOWANCE; AMENDING SECTION
  4        15-2-402, IDAHO CODE, TO REVISE THE DETERMINATION AND AMOUNT OF THE  HOME-
  5        STEAD  ALLOWANCE,  TO  REMOVE CERTAIN CIRCUMSTANCES QUALIFYING A SURVIVING
  6        SPOUSE FOR A HOMESTEAD ALLOWANCE, TO  REVISE  TERMINOLOGY,  TO  PROVIDE  A
  7        HOMESTEAD  ALLOWANCE FOR CERTAIN MINOR AND DISABLED CHILDREN AND TO REMOVE
  8        CERTAIN CIRCUMSTANCES QUALIFYING SUCH MINOR AND DISABLED  CHILDREN  FOR  A
  9        HOMESTEAD ALLOWANCE; AMENDING SECTION 15-2-403, IDAHO CODE, TO REMOVE REF-
 10        ERENCES  TO  THE FAMILY ALLOWANCE, TO PROVIDE FOR AN ALLOWANCE FOR CERTAIN
 11        TANGIBLE PERSONAL PROPERTY, TO REMOVE PROVISIONS DEALING  WITH  ENCUMBERED
 12        CHATTELS AND DEFICIENCIES OF EXEMPT PROPERTY, TO REVISE TERMINOLOGY AND TO
 13        MAKE TECHNICAL CORRECTIONS; REPEALING SECTION 15-2-404, IDAHO CODE, RELAT-
 14        ING TO FAMILY ALLOWANCE; AMENDING SECTION 15-2-405, IDAHO CODE, TO PROVIDE
 15        A  CODE REFERENCE, TO REMOVE REFERENCES TO THE FAMILY ALLOWANCE, TO REMOVE
 16        A PROVISION FOR A CERTAIN LUMP SUM FAMILY ALLOWANCE, TO REVISE TERMINOLOGY
 17        AND TO REMOVE A PROVISION PERMITTING A PERSONAL REPRESENTATIVE OR  CERTAIN
 18        INTERESTED  PERSONS  TO PETITION THE COURT FOR A CERTAIN FAMILY ALLOWANCE;
 19        AMENDING CHAPTER 2, TITLE 15, IDAHO CODE, BY THE ADDITION OF A NEW SECTION
 20        15-2-406, IDAHO CODE, TO PROVIDE FOR LIMITATIONS ON  EXEMPT  PROPERTY  AND
 21        HOMESTEAD  ALLOWANCE  BY WILL; AND AMENDING SECTION 56-218, IDAHO CODE, TO
 22        REMOVE PROVISIONS DEALING WITH PETITIONING THE COURT FOR AN  EXEMPT  PROP-
 23        ERTY  ALLOWANCE  CLAIM  UNDER  CERTAIN CIRCUMSTANCES AND TO MAKE TECHNICAL
 24        CORRECTIONS.

 25    Be It Enacted by the Legislature of the State of Idaho:

 26        SECTION 1.  That Section 15-2-401, Idaho Code, be, and the same is  hereby
 27    amended to read as follows:

 28        15-2-401.  APPLICABLE  LAW.  This part applies to the estate of a decedent
 29    who dies domiciled in this state. Rights to the homestead  allowance,  and  to
 30    exempt  property,  and  the family allowance for a decedent who dies not domi-
 31    ciled in this state are governed by the law  of  the  decedent's  domicile  at
 32    death.

 33        SECTION  2.  That Section 15-2-402, Idaho Code, be, and the same is hereby
 34    amended to read as follows:

 35        15-2-402.  HOMESTEAD ALLOWANCE. The homestead allowance is exempt from and
 36    has priority over all claims against the  estate  except  as  hereinafter  set
 37    forth. The homestead allowance is in addition to any share passing to the sur-
 38    viving spouse or minor or dependent disabled child by the will of the decedent
 39    unless  otherwise  provided in the will, or by intestate succession, or by way
 40    of elective share. The amount of the homestead allowance shall be the sum  set
 41    forth  in  the  provisions of section 55-1003, Idaho Code, as those provisions

                                       2

  1    are in effect on the date of  the  decedent's  death  fifty  thousand  dollars
  2    ($50,000).  The  homestead  allowance is not a right to claim ownership of, or
  3    succession to, any homestead  owned  by  the  decedent  at  the  time  of  the
  4    decedent's  death but is only the right to claim the sum set forth above.  The
  5    right to a homestead allowance is determined as follows:
  6        (a)  If there is a surviving spouse of the  decedent,  and  the  surviving
  7    spouse  does  not, at the time of the death of the decedent, have a homestead,
  8    which for purposes of this chapter shall have the same definition as set forth
  9    in section 63-701(2), Idaho Code, the surviving spouse shall be entitled to  a
 10    homestead  allowance.  unless  the surviving spouse receives (by will or other
 11    dispositive instrument, by intestate succession, by survivorship, or by  other
 12    means)  such  a  homestead either from the decedent or due to the death of the
 13    decedent;
 14        (b)  If there is no surviving spouse, and there are one (1) or more  minor
 15    and/or  dependent  children  of  the decedent under the age of twenty-one (21)
 16    years whom the decedent was obligated to support or children who were in  fact
 17    being supported by the decedent and who are disabled, as provided in 42 U.S.C.
 18    section 1382c, then each such minor or disabled child and each dependent child
 19    of  the  decedent  is  entitled to a portion of the homestead allowance in the
 20    amount of the homestead allowance divided by the number of  such  minor    and
 21    dependent  or  disabled children of the decedent entitled to receive the home-
 22    stead allowance, unless the minor child or dependent child receives  (by  will
 23    or  other dispositive instrument, by intestate succession, by survivorship, or
 24    by other means) such a homestead either from the decedent or due to the  death
 25    of the decedent.

 26        SECTION  3.  That Section 15-2-403, Idaho Code, be, and the same is hereby
 27    amended to read as follows:

 28        15-2-403.  EXEMPT PROPERTY. In addition to any  homestead  allowance,  the
 29    decedent's  surviving spouse is entitled from the estate to value, not exceed-
 30    ing ten thousand  dollars  ($10,000)  in  excess  of  any  security  interests
 31    therein,  in  tangible personal property including, but not limited to, house-
 32    hold furniture, automobiles, furnishings,  appliances,  family  heirlooms  and
 33    personal  effects,  subject  to  the terms of section 15-2-406, Idaho Code. If
 34    there is no surviving spouse, the decedent's children are entitled jointly  to
 35    the  same  value  unless the decedent's will provides otherwise. If encumbered
 36    chattels are selected and if the value in excess of security  interests,  plus
 37    that of other exempt property, is less than ten thousand dollars ($10,000), or
 38    if there is not ten thousand dollars ($10,000) worth of exempt property in the
 39    estate,  the spouse or children are entitled to other assets of the estate, if
 40    any, to the extent necessary to make up  the  ten  thousand  dollar  ($10,000)
 41    value  tangible  personal  property, subject to the terms of section 15-2-406,
 42    Idaho Code. Rights to exempt property and assets needed to  make  up  a  defi-
 43    ciency  of  exempt  property have priority over all claims against the estate,
 44    except that the right to any assets to make up a deficiency of exempt property
 45    shall abate as necessary to permit prior payment of  homestead  allowance  and
 46    family  allowance, and except as otherwise provided. These rights are in addi-
 47    tion to any benefit or share passing to the surviving spouse  or  children  by
 48    the  will  of  the  decedent,  (unless  otherwise provided in the will), or by
 49    intestate succession, or by way of elective share.

 50        SECTION 4.  That Section 15-2-404, Idaho Code, be, and the same is  hereby
 51    repealed.

                                       3

  1        SECTION  5.  That Section 15-2-405, Idaho Code, be, and the same is hereby
  2    amended to read as follows:

  3        15-2-405.  SOURCE -- DETERMINATION -- DOCUMENTATION -- MISCELLANEOUS  PRO-
  4    VISIONS. If the estate is otherwise sufficient, property specifically devised,
  5    including  the provisions pursuant to section 15-2-513, Idaho Code, may not be
  6    used to satisfy rights to the homestead allowance, family allowance or, exempt
  7    property. Subject to this restriction, the surviving spouse, the guardians  of
  8    the  minor  children,  or  children  who are adults may select property of the
  9    estate as homestead allowance, family allowance, or exempt property. The  per-
 10    sonal  representative  may  make these selections if the surviving spouse, the
 11    children or the guardians of the minor children are unable or fail  to  do  so
 12    within a reasonable time or if there is no guardian of a minor child. The per-
 13    sonal  representative  may  execute  an  instrument to establish the homestead
 14    allowance, family allowance, or exempt property. The  personal  representative
 15    may  determine the family allowance in a lump sum not exceeding eighteen thou-
 16    sand dollars ($18,000) or periodic installments  not  exceeding  one  thousand
 17    five  hundred  dollars  ($1,500)  per month for one (1) year, and may disburse
 18    funds of the estate in payment of the family allowance and  any  part  of  the
 19    homestead allowance payable in cash. The personal representative or any inter-
 20    ested person aggrieved by any selection, determination, payment, proposed pay-
 21    ment,  or  failure to act under this section may petition the court for appro-
 22    priate relief, which may include a family allowance other than that which  the
 23    personal  representative determined or could have determined. Despite any lan-
 24    guage to the contrary in this chapter, the homestead allowance, family  allow-
 25    ance,  and  exempt  property  are  not mandatory or automatic, allowances, but
 26    rather must be applied for by the surviving spouse and/or children, as  appro-
 27    priate, as set forth in this title. Even though these allowances and the right
 28    to apply for exempt property are not claims against estates, the manner of and
 29    time  period for applying for these allowances or the exempt property shall be
 30    the same as set forth in sections 15-3-801, 15-3-803 and 15-3-804, Idaho Code;
 31    provided however, that the personal representative shall not  be  required  to
 32    give  actual  notice  to  a  surviving spouse or a minor or dependent disabled
 33    child of the right to apply for these homestead allowances or the exempt prop-
 34    erty, and provided further that any notice actually given by the personal rep-
 35    resentative does not need to make any additional or special  reference  to  an
 36    application by the surviving spouse or dependent or minor or disabled or adult
 37    children  also  being barred if not submitted within the time period set forth
 38    in the notice. Also, the personal representative shall not be  liable  to  the
 39    surviving spouse, minor or dependent disabled or adult child, any creditor, or
 40    any  other  successor  to the estate in the same manner as provided in section
 41    15-3-801(c), Idaho Code, as a result of giving or failing to give notice.  The
 42    homestead allowance, family allowance, and exempt property may not be enforced
 43    or  applied  for  on  behalf  of a surviving spouse or a minor or dependent or
 44    adult child of the decedent by a creditor of the surviving spouse or  a  minor
 45    or  dependent  disabled  or  adult  child of the decedent, or by any person or
 46    entity claiming by, through, or because of the surviving spouse  or  minor  or
 47    dependent disabled or adult child of the decedent. Despite any language to the
 48    contrary  in  other  sections of this chapter, the homestead allowance, family
 49    allowance, and exempt property do not take precedence over reasonable adminis-
 50    trative costs and expenses of the estate of the decedent.

 51        SECTION 6.  That Chapter 2, Title 15, Idaho Code,  be,  and  the  same  is
 52    hereby  amended by the addition thereto of a NEW SECTION, to be known and des-
 53    ignated as Section 15-2-406, Idaho Code, and to read as follows:

                                       4

  1        15-2-406.  LIMITATIONS ON EXEMPT PROPERTY AND HOMESTEAD ALLOWANCE BY WILL.
  2    The decedent may provide by will that a surviving spouse, and/or  adult  chil-
  3    dren, but not minor or disabled children:
  4        (1)  Are not entitled to any exempt property or homestead allowance; or
  5        (2)  Are entitled to limited exempt property or a limited homestead allow-
  6    ance, as provided in the will; but
  7        (3)  May  not  condition  such  elimination or limitation upon whether the
  8    estate of the decedent is subject to a claim for estate recovery for  medicaid
  9    benefits paid to the decedent or to a spouse of the decedent.

 10        SECTION  7.  That  Section  56-218, Idaho Code, be, and the same is hereby
 11    amended to read as follows:

 12        56-218.  RECOVERY OF CERTAIN MEDICAL ASSISTANCE. (1) Except where exempted
 13    or waived in accordance with federal law medical assistance pursuant  to  this
 14    chapter  paid  on behalf of an individual who was fifty-five (55) years of age
 15    or older when the individual received such assistance may  be  recovered  from
 16    the  individual's  estate,  and the estate of the spouse, if any, for such aid
 17    paid to either or both:
 18        (a)  There shall be no adjustment or recovery until  after  the  death  of
 19        both  the  individual  and the spouse, if any, and only at a time when the
 20        individual has no surviving child who is under twenty-one  (21)  years  of
 21        age  or  is  blind  or  permanently  and totally disabled as defined in 42
 22        U.S.C. 1382c.
 23        (b)  While one (1) spouse survives, except where  joint  probate  will  be
 24        authorized  pursuant to section 15-3-111, Idaho Code, a claim for recovery
 25        under this section may be  established  in  the  estate  of  the  deceased
 26        spouse.
 27        (c)  The  claim  against  the  estate of the first deceased spouse must be
 28        made within the time provided by section 15-3-801(b), Idaho Code,  if  the
 29        estate  is  administered  and  actual  notice  is given to the director as
 30        required by subsection (5) of this section. However, if there is no admin-
 31        istration of the estate of the first deceased  spouse,  or  if  no  actual
 32        notice is given to the director as required by subsection (5) of this sec-
 33        tion,  no  claim  shall  be  required until the time provided for creditor
 34        claims in the estate of the survivor.
 35        (d)  Nothing in this section authorizes the recovery of the amount of  any
 36        aid  from the estate or surviving spouse of a recipient to the extent that
 37        the need for aid resulted from a crime committed against the recipient.
 38        (2)  Transfers of real or personal property, on  or  after  the  look-back
 39    dates defined in 42 U.S.C. 1396p, by recipients of such aid, or their spouses,
 40    without  adequate consideration are voidable and may be set aside by an action
 41    in the district court.
 42        (3)  Except where there is a surviving spouse, or a surviving child who is
 43    under twenty-one (21) years of age or is blind or permanently and totally dis-
 44    abled as defined in 42 U.S.C. 1382c, the amount of any medical assistance paid
 45    under this chapter on behalf of an individual who was fifty-five (55) years of
 46    age or older when the individual received such assistance is a  claim  against
 47    the  estate in any guardianship or conservatorship proceedings and may be paid
 48    from the estate.
 49        (4)  For purposes of this section, the term "estate" shall include:
 50        (a)  All real and personal property and other assets included  within  the
 51        individual's estate, as defined for purposes of state probate law; and
 52        (b)  Any  other  real  and personal property and other assets in which the
 53        individual had any legal title or interest at the time of death,  (to  the

                                       5

  1        extent  of  such  interest), including such assets conveyed to a survivor,
  2        heir, or assign of the deceased individual through joint tenancy,  tenancy
  3        in common, survivorship, life estate, living trust or other arrangement.
  4        (5)  Claims  made pursuant to this section shall be classified and paid as
  5    a debt with preference as defined in section 15-3-805(5), Idaho Code. Any dis-
  6    tribution or transfer of the estate prior to satisfying such claim is voidable
  7    and may be set aside by an action in the district court. The  personal  repre-
  8    sentative  of  every estate subject to a claim under this section must, within
  9    thirty (30) days of the appointment, give notice in writing to the director of
 10    his or her appointment to administer the estate. However, if an  exempt  prop-
 11    erty  allowance  claim is made in an estate subject to a claim under this sec-
 12    tion by one (1) or more persons not described in subsection (2) of  this  sec-
 13    tion,  then,  to  the  extent such exempt property allowance claim exceeds the
 14    fair market value of the actual personal property of the decedent held by  the
 15    estate  subject  to a claim under this section (including, but not limited to,
 16    such items as household furniture, automobiles, furnishings,  appliances,  and
 17    personal  effects),  the  persons  making such exempt property allowance claim
 18    must file with the court, and with the personal representative or  administra-
 19    tor  of  the  estate,  and with the department, a written statement under oath
 20    containing the following:
 21        (a)  A statement that no personal property of the decedent has been trans-
 22        ferred without adequate consideration to any person or  entity,  including
 23        any  one  (1)  or more of the persons making the exempt property allowance
 24        claim, to the actual knowledge of any of the  persons  making  the  exempt
 25        property  allowance  claim,  within  a time period commencing one (1) year
 26        prior to the death of the decedent and ending on the date  of  the  state-
 27        ment; or
 28        (b)  A  statement  that  personal property of the decedent has been trans-
 29        ferred without adequate consideration to any person or  entity,  including
 30        one (1) or more of the persons making the exempt property allowance claim,
 31        within  a  time  period  commencing one (1) year prior to the death of the
 32        decedent and ending on the date of the statement, to the actual  knowledge
 33        of  any  of  the  persons  making the exempt property allowance claim, and
 34        stating the fair market value of the personal property so transferred, and
 35        stating a reasonable description of such property, and stating the  method
 36        of  determining  the  fair market value of the personal property so trans-
 37        ferred.
 38    If the written statement indicates that there has been such a transfer of per-
 39    sonal property, then the fair market value of the personal property so  trans-
 40    ferred shall be subtracted from the remaining exempt property allowance claim,
 41    after  subtraction  of  the personal property held by the estate, as described
 42    above, and only any still remaining portion of the exempt property  claim  may
 43    be  paid  by  the  estate  to the persons making the exempt property allowance
 44    claim. The statement submitted under paragraph (a) or (b) of this  subsection,
 45    must be signed under oath by all persons making the exempt property claim.
 46        (6)  The  department may file a notice of lien against the property of any
 47    estate subject to a claim under this section.
 48        (a)  In order to perfect a lien against real  or  personal  property,  the
 49        department  shall,  within ninety (90) days after the personal representa-
 50        tive or successor makes a written request for prompt action to the  direc-
 51        tor,  or  three  (3)  years  from  the death of the decedent, whichever is
 52        sooner, file a notice of lien in the same general form and manner  as pro-
 53        vided in section 56-218A(3)(a), Idaho Code, in the office of the secretary
 54        of state, pursuant to section 45-1904,  Idaho  Code.  Failure  to  file  a
 55        notice  of  lien  does  not affect the validity of claims made pursuant to

                                       6

  1        this section.
  2        (b)  The department may release the lien in whole or in part to permit the
  3        estate property to be administered by a court-appointed personal represen-
  4        tative.
  5        (c)  The department may foreclose its lien, without probate, in any of the
  6        following circumstances:
  7             (i)   Where no personal representative has been appointed  after  one
  8             (1)  year from the date of death of the survivor of both the individ-
  9             ual and spouse, if any;
 10             (ii)  Where the property has been abandoned by the  decedent's  heirs
 11             or successors, if any;
 12             (iii) Where  the  real  property  taxes that are due and payable have
 13             remained unpaid for two (2) years and, after demand  by  the  depart-
 14             ment,  the  heirs or successors, if any, have failed to seek appoint-
 15             ment or pay the property taxes; or
 16             (iv)  Where all parties interested in the estate consent to  foreclo-
 17             sure of the lien.
 18        (7)  The director shall promulgate rules reasonably necessary to implement
 19    this  section including, but not limited to, rules establishing undue hardship
 20    waivers for the following circumstances:
 21        (a)  The estate subject to recovery is income-producing property that pro-
 22        vides the primary source of support for other family members; or
 23        (b)  The estate has a value below an amount specified in the rules; or
 24        (c)  Recovery by the department will cause the heirs of the deceased indi-
 25        vidual to be eligible for public assistance.
 26        (8)  The cause of action to void a transfer without adequate consideration
 27    established in this section shall not be deemed  to  have  accrued  until  the
 28    department  discovers,  or reasonably could have discovered, the facts consti-
 29    tuting the transfer without adequate consideration.

Statement of Purpose / Fiscal Impact


                      STATEMENT OF PURPOSE

                           RS 17887 

The allowances in the Idaho Probate Code for surviving spouses
and children (especially adult children) have caused endless
problems in interpretation and implementation.  Additionally,
such allowances have created problems because of the Deficit
Reduction Act changes to Medicaid and also interpretations of
existing rules and statutes by Idaho Medicaid estate recovery. 
One of the major problems caused by the allowances is in the
situation of blended families, where the husband and wife each
have family from prior marriages, often separate property, and
wish to leave their separate property, and perhaps their share of
community property, to their own children, believing that leaving
the property to their current spouse will result in all the
property passing to the children of the surviving spouse at his
or her death, thereby eliminating any inheritance to the children
of the first-to-die spouse.  Many cases have arisen where the
surviving spouse is able to warp the estate plan of the first-to-
die spouse by taking the probate allowances (currently up to not
less than $128,000) despite the provisions of the Will of the
deceased spouse.  The apparent actual original intent of the
allowances, to protect indigent spouses and minor or dependent
children, was seldom met by the allowances, and often the
surviving spouse took the allowances and left the minor or
dependent children of the deceased spouse indigent.

This bill, done in consultation with Medicaid Estate Recovery as
to Medicaid issues, restructures the allowances to meet their
original intent.

     (1) The existing family allowance is deleted, since it was
     based on probate being a process that locked up all assets,
     therefore requiring a temporary monthly or lump sum payment
     to the spouse or minor or disabled children to sustain them
     during the probate.  This is simply no longer applicable.

     (2) The current homestead allowance, which either is $100,00 
     or nothing, is coupled to Idaho Code 55-1003 and represents
     the amount exempt from bankruptcy or seizure by unsecured
     creditors in a homestead.  However, the allowance as
     currently constituted did not serve that purpose.  The
     probate homestead allowance was not given if the spouse
     already owned a homestead as defined by property tax law, or
     received one because of the death of the deceased spouse.  A
     one-half ownership in a residence is deemed to be a
     homestead.  As an example, if a husband and wife owned their
     residence with an equity of $100,000, current Idaho law
     (Title 55, Chapter 10) would protect all that equity. 
     However, if one spouse died, leaving the house to the
     surviving spouse, the one-half ownership of the deceased
     spouse would no longer be protected, but would be subject to
     the estate debts, even though the surviving spouse is
     entitled to a full $100,000 homestead.  This aberration in
     the law is corrected by this bill, which sets a straight
     forward $50,000 homestead amount, not dependent on whether
     the surviving spouse (or minor or disabled children) owned a
     homestead.  This will have the net effect of protecting the
     one-half of the homestead in the estate.  It also removes
     the complicated language from the existing law on when the
     allowance would or would not be payable.

     (3)  The bill also allows the decedent to limit or eliminate
     the ability of a surviving spouse or (as to the exempt
     property, adult children), but not minor or dependent
     children, to claim the allowance.  Existing law has already
     given that ability to eliminate the exempt property claim as
     to adult children and this bill expands that to the
     surviving spouse as well.  This removes the ability of a
     surviving spouse to override the estate plan of the deceased
     spouse, while still allowing the allowances if the deceased
     spouse so wishes. This bill will not have any current fiscal
     effect on Medicaid estate recovery, since Idaho Medicaid
     estate recovery currently claims the right to make a
     contingent claim in the estate of the community spouse, if
     the institutionalized spouse is still alive and receiving
     Medicaid benefits.  This claim is independent of the
     allowances.  However, this bill does remove the problem of
     whether the failure of an institutionalized spouse to take
     allowances will be a transfer which disqualifies the
     institutionalized spouse from receiving Medicaid for the
     penalty period, currently approximately 25 months, based on
     the allowance amounts and the current Idaho Divestment
     Penalty Divisor.

     (4) The bill also greatly simplifies the exempt property
     allowance by limiting it to only tangible personal property
     of certain types and eliminating any cash equivalent.  This
     solves a number of Medicaid estate recovery problems, and
     allows the much more complex provisions in Section 56-218
     (Section Seven of this bill), which were implemented several
     sessions ago in an attempt to solve those problems, to be
     eliminated.  This will greatly clarify and simplify the
     interaction between Medicaid estate recovery and the exempt
     property provisions.

This bill greatly simplifies and clarifies the probate allowances
and their application.  It also gives freedom of choice to
decedents on how their estates will pass.  Finally, it eliminates
several problems in the Medicaid area, without having any current
fiscal impact on Medicaid.

                                

                          FISCAL NOTE

This bill will have no fiscal impact.






CONTACT:
Name:     Robert L. Aldridge, Trust & Estate Professionals of
          Idaho, Inc.
          Telephone: office: (208) 336-9880  Cell: (208) 631-2481
          
          
STATEMENT OF PURPOSE/FISCAL NOTE                       S 1419