Maryland Estate & Medicaid Planning: Strategies to Avoid Probate

Why Probate Avoidance Matters in Maryland

Probate is the court-supervised process for transferring assets titled solely in a decedent’s name without a valid beneficiary. In Maryland, probate is public, involves notices and filings, and can add time and cost for families. Thoughtful planning can move many assets outside probate, reduce delays, and coordinate with long-term care goals. See Maryland’s public resources on probate and non-probate property for context: Estate Administration (Probate) and Non-Probate Property.

Core Tools to Avoid Probate in Maryland

• Revocable living trusts. Assets retitled to a properly drafted and funded revocable trust typically pass outside probate at death, while you keep control during life through your powers as trustee. Maryland’s Trust Act recognizes revocable trusts and the settlor’s power to revoke. See ET §14.5-602.
• Beneficiary designations. Life insurance, annuities, and retirement accounts transfer directly to named beneficiaries and bypass probate, if the forms are valid and current. See Non-Probate Property.
• POD/TOD registrations for financial accounts and securities. Many banks allow Pay-on-Death (POD) designations by contract. For securities, Maryland has adopted the Uniform Transfer-on-Death Security Registration Act. See ET Title 16 and Non-Probate Property.
• Joint ownership with survivorship. Accounts or real estate titled as joint tenants with right of survivorship or, for married couples, as tenants by the entirety, typically pass to the survivor outside probate. See Tenancy by the Entirety.
• Life estate deeds (real property). A traditional life estate deed can allow the remainder to pass outside probate at death of the life tenant. Maryland does not have a statutory transfer-on-death deed for real estate, and “Lady Bird” (enhanced life estate) deeds are not authorized by Maryland statute; effectiveness of any enhanced features depends on careful, Maryland-specific drafting. See Life Estate Deeds and Transfer-on-Death Deeds (Maryland does not authorize).

Coordinating Probate Avoidance with Medicaid Planning

Medicaid long-term care planning focuses on eligibility while preserving allowable resources for a spouse or heirs. Steps that avoid probate do not automatically satisfy Medicaid rules. Review any transfers, trust funding, or beneficiary changes against federal and Maryland requirements.

• Countable vs. non-countable resources. Federal rules govern what is countable and how trusts are treated. See 42 U.S.C. § 1396p and Maryland eligibility regulations at COMAR 10.09.24.
• Spousal protections. Federal spousal impoverishment protections apply. See 42 U.S.C. § 1396r-5.
• Transfer penalties (look-back). Gifts and below-market transfers can trigger a penalty period if made within the look-back window; trusts funded during life must be analyzed for availability. See 42 U.S.C. § 1396p(c), (d) and COMAR 10.09.24.
• Estate recovery. Maryland participates in Medicaid estate recovery. Maryland generally limits recovery to the decedent’s probate estate under state law; assets that pass outside probate are generally not subject to recovery, but titling or beneficiary errors can bring assets back into probate and rules can change. See Maryland’s program page: Medicaid Estate Recovery Program and the federal framework at 42 U.S.C. § 1396p(b).

Revocable vs. Irrevocable Trusts in This Context

• Revocable living trusts. Useful for probate avoidance, incapacity planning, and privacy; but for Medicaid, assets in a revocable trust are generally considered available because the settlor can revoke or access them. See 42 U.S.C. § 1396p(d) and ET §14.5-602.
• Irrevocable trusts. When properly structured and funded, they may remove assets from countable resources and reduce recovery exposure. However, transfers to such trusts are subject to look-back rules and can affect eligibility if made within the penalty period. Detailed drafting is critical to address access, discretion, and tax outcomes. See 42 U.S.C. § 1396p(d).

Beneficiary Designations and Retirement Accounts

Beneficiary forms control distribution regardless of your will. Coordinate primary and contingent beneficiaries, consider trusts for minors or special needs beneficiaries, weigh tax implications, and ensure consistency with Medicaid planning for a spouse or disabled beneficiary. Keep written confirmations from custodians and review designations after life events. See Non-Probate Property.

Real Estate Options

• Joint tenancy or tenants by the entirety. Common for married couples; the survivor typically takes outside probate. See Tenancy by the Entirety.
• Life estate deeds. Can retain lifetime occupancy while passing the remainder outside probate. Consider creditor exposure, tax basis, refinancing limits, and Medicaid transfer implications. See Life Estate Deeds.
• Trust funding. Titling real estate to a revocable or appropriate irrevocable trust can streamline succession and disability management. See ET §14.5-602.

Special Needs, Minor Beneficiaries, and Spendthrift Concerns

Leaving assets outright to minors or individuals with disabilities can cause guardianship issues or disrupt means-tested benefits. Consider special needs trusts and spendthrift provisions. See federal SNT provisions at 42 U.S.C. § 1396p(d)(4) and Special Needs Trusts (Maryland).

Common Pitfalls

• Unfunded revocable trusts. Creating a trust without retitling assets leaves property in the probate estate.
• Outdated beneficiary forms. Predeceased or divorced beneficiaries can cause default to the estate, sending assets through probate.
• DIY deeds or forms. Errors in vesting, execution, or notarization can cloud title or negate probate-avoidance goals.
• Inadvertent Medicaid penalties. Gifts or trust funding within the look-back can delay eligibility.
• Ignoring taxes. Coordinate income, estate, gift, property, and basis consequences.

Practical Next Steps

• Inventory assets and how each is titled or designated.
• Identify beneficiaries needing trusts or protections.
• Decide which assets to retitle to a revocable trust versus keep with updated beneficiary designations.
• If Medicaid planning is a goal, obtain a Maryland-specific analysis of resource limits, transfer rules, and estate recovery scope.
• Execute deeds, assignments, and designation updates; confirm with institutions in writing.
• Review your plan after major life events or law changes.

Ready to get started? Contact our Maryland team for a tailored plan: Schedule a consultation.

FAQ

Does a will avoid probate in Maryland?

No. A will directs probate. To bypass probate, use non-probate transfers like trusts, beneficiary designations, and survivorship titling.

Are revocable trusts protected from Medicaid?

Generally no. Assets in a revocable trust are typically considered available for Medicaid eligibility purposes.

Does Maryland recover Medicaid from non-probate assets?

Maryland generally limits estate recovery to probate assets, but mistakes can pull assets back into probate and laws can change.

Can Maryland real estate use a transfer-on-death deed?

Maryland does not authorize statutory TOD deeds for real property. Consider life estate deeds or trusts.

How Our Maryland Team Helps

We design coordinated Maryland estate and Medicaid plans that prioritize probate avoidance, eligibility analysis, and family objectives. Services include trust design and funding, deed work, beneficiary audits, Medicaid risk assessments, and collaboration with tax and financial advisors. Talk to us.

Sources

• People’s Law Library of Maryland – Estate Administration (Probate)
• People’s Law Library of Maryland – Non-Probate Property
• Maryland Code, Estates & Trusts § 14.5-602 (Revocable trusts; power to revoke)
• Maryland Code, Estates & Trusts Title 16 (Uniform TOD Security Registration Act)
• People’s Law Library of Maryland – Tenancy by the Entirety
• People’s Law Library of Maryland – Life Estate Deeds
• People’s Law Library of Maryland – Transfer-on-Death Deeds (Maryland)
• 42 U.S.C. § 1396p (Medicaid: asset transfers, trusts, estate recovery)
• 42 U.S.C. § 1396r-5 (Spousal impoverishment protections)
• COMAR 10.09.24 (Medical Assistance Eligibility – Maryland)
• Maryland Department of Health – Medicaid Estate Recovery Program
• People’s Law Library of Maryland – Special Needs Trusts

Disclaimer: This blog is for general informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Maryland law and Medicaid rules change, and eligibility depends on specific facts. Consult qualified Maryland counsel for advice tailored to your situation.