Short Answer

In North Carolina, a spouse who inherits property can consider a timely, formal renunciation (disclaimer) so the inheritance passes to the next taker and never counts as their asset. If the spouse keeps the inheritance, a properly drafted first-party special needs trust may preserve Medicaid eligibility (especially for recipients under age 65), but transfers can trigger penalties in some Medicaid programs. Timing, paperwork, and program category matter, so act quickly and get advice before accepting or using the asset.

Understanding the Problem

You want to know whether, in North Carolina, your spouse (a Medicaid recipient) can keep Medicaid if they inherit real property. Your spouse has already become entitled to inherited real estate that has not been listed or sold. The core decision is whether the spouse should keep the property, take steps to shelter it lawfully, or decline it in a way that protects eligibility.

Apply the Law

North Carolina law allows an heir or devisee to formally renounce (disclaim) an inheritance so the property passes as if the person predeceased the decedent. For inherited real estate, a written, signed, and acknowledged renunciation must be filed with the Clerk of Superior Court in the county where the estate is or could be administered, and a copy must be recorded with the Register of Deeds to pass title. If the spouse keeps the inheritance, Medicaid programs generally count non-excluded assets; some recipients can use a first-party special needs trust to preserve eligibility. Rules differ by Medicaid category (e.g., disability, long-term care), and transfers can cause penalties in some programs.

Key Requirements

• Valid renunciation (disclaimer): Must be in writing, identify the transferor and the property, state the extent of the renunciation, and be signed and acknowledged. File with the Clerk of Superior Court; record a copy with the Register of Deeds for real property.
• Timing: File a renunciation of a present interest within the federal disclaimer window (generally within 9 months of the decedent’s death) to get full legal effect and avoid acceptance issues.
• No prior acceptance or transfer: You cannot disclaim if you have assigned, encumbered, sold, or otherwise agreed to transfer the interest, or waived the right to renounce.
• Effect of renunciation: Property passes as if the renouncing person predeceased; the renouncing spouse has no marital or elective-share claim in that property.
• If keeping the inheritance: Determine whether the asset is countable for your specific Medicaid category; consider a first-party special needs trust (often for disabled individuals under 65) and report changes to DSS promptly.

What the Statutes Say

• N.C. Gen. Stat. Chapter 31B (Disclaimers) – Framework for renouncing inherited interests and effects of a valid renunciation.
• N.C. Gen. Stat. § 31B-2 (Filing and recording a renunciation) – Where to file, delivery requirements, and recording real property renunciations.
• N.C. Gen. Stat. § 108A-70.5 (Medicaid estate recovery) – State authority to recover certain Medicaid costs from a beneficiary’s estate after death.

Analysis

Apply the Rule to the Facts: Because your spouse has inherited real property that has not been listed or sold, they still may renounce the inheritance if they have not accepted or transferred it. A timely, properly filed renunciation would pass the property to the next taker and keep it from counting as your spouse’s asset. If your spouse keeps the property, it will likely be a countable resource unless an exclusion applies; in that case, explore a first-party special needs trust if your spouse qualifies and the trust fits the Medicaid category’s rules.

Process & Timing

1. Who files: The inheriting spouse. Where: Clerk of Superior Court in the county where the decedent’s estate is or could be administered; record real property renunciations with the county Register of Deeds. What: A written, signed, acknowledged renunciation identifying the decedent and describing the interest; deliver copies to the appropriate parties (e.g., personal representative). When: Generally within 9 months of death for a present interest.
2. After filing with the Clerk, promptly record the renunciation in the Register of Deeds so title passes to the next taker; notify the personal representative and any affected parties.
3. If keeping the inheritance, consult counsel to evaluate whether a first-party special needs trust is available and appropriate; then report the change in assets to your local Department of Social Services and follow any program-specific steps.

Exceptions & Pitfalls

• Using, selling, mortgaging, or contracting to transfer the inherited property can block a renunciation.
• Missing the filing window or failing to record a renunciation of real property can undermine the result and cloud title.
• Medicaid category matters: in some programs (especially long-term care), disclaimers or transfers can be treated as uncompensated transfers that trigger penalties; get program-specific advice before acting.
• First-party special needs trusts must be drafted carefully and meet federal and state rules (including a Medicaid payback provision); age limits and transfer-penalty rules may apply.
• Estate recovery is separate from eligibility; property retained by the beneficiary may be subject to recovery after death.

Talk to a Estate Planning Attorney

If you’re dealing with an inherited property and Medicaid eligibility questions, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 704-555-1212.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.