Dec132025
Probate Q&A Series

Will claiming or transferring the car now affect the surviving spouse’s current or upcoming Medicaid eligibility? – North Carolina

Short Answer

Under North Carolina law, one vehicle is usually an exempt resource for Medicaid, so simply claiming or retitling a modest personal car from a deceased spouse’s estate often does not, by itself, cause loss of Medicaid. The bigger risk is how a transfer is structured and whether it looks like a gift for less than fair market value within the Medicaid “lookback” period. A spousal year’s allowance or DMV small-estate title transfer can be structured in ways that are generally neutral for Medicaid, but the details matter and should be reviewed with a Medicaid planner or benefits attorney.

Understanding the Problem

The narrow question is whether, in North Carolina, a surviving spouse’s decision to claim a car through a spousal procedure (such as a year’s allowance) or to transfer the deceased spouse’s car directly to an adult child or other family member can affect the surviving spouse’s current or future Medicaid eligibility. The focus is on a small estate with no other assets, no creditor claims, and no formal estate administration, where the will leaves everything to the surviving spouse, but another family member currently drives the vehicle and wants clear title.

Apply the Law

North Carolina law combines probate rules about spousal allowances and small-estate car transfers with Medicaid rules on exempt resources and transfers for less than fair market value. The car can be moved out of the decedent’s name in probate (for example, by year’s allowance or small-estate DMV affidavit), but Medicaid looks at whether the surviving spouse owns countable resources and whether the spouse or someone acting for the spouse has given away assets during the lookback period.

Key Requirements

  • Medicaid resource rules: For Medicaid, one vehicle used for transportation is typically treated as an exempt resource, but its value and actual use still must fit Medicaid policy.
  • Prohibited transfers: If the surviving spouse (or an agent acting for the spouse) transfers assets for less than fair market value during the lookback period, Medicaid may impose a penalty period of ineligibility.
  • Spousal estate rights: A surviving spouse has specific probate rights in North Carolina, including a year’s allowance and other potential claims, which can bring assets into the spouse’s name before any transfer is made.

What the Statutes Say

Analysis

Apply the Rule to the Facts: In the facts described, the decedent’s only asset is a vehicle, the will leaves everything to the surviving spouse, and there is no open estate or creditor pressure. Using a year’s allowance to assign the car to the surviving spouse would usually just formalize what the will already gives and, because one car is normally an exempt Medicaid resource, that step alone typically does not harm eligibility. By contrast, if the spouse (or an agent under power of attorney) accepts the car and then gives it to the adult child for little or no payment during the lookback period, Medicaid may treat that as a penalized transfer. A direct DMV small-estate transfer out of the decedent’s name that bypasses the spouse may avoid adding a resource to the spouse, but it has to be structured carefully so it does not look like the spouse directed a gift.

Process & Timing

  1. Who files: Typically the surviving spouse or the executor named in the will. Where: Clerk of Superior Court, Estates Division, in the North Carolina county where the decedent was domiciled. What: For a year’s allowance, Application and Assignment of Year’s Allowance (AOC-E-100); for a small-estate vehicle transfer, DMV Form MVR-317 (Affidavit of Authority to Assign Title) if conditions are met. When: For year’s allowance in a case with no personal representative, there is no fixed outer time limit under current law, but planning should occur before any Medicaid application or recertification if eligibility is a concern.
  2. The clerk reviews the petition for year’s allowance; if the facts match the statute, the clerk signs the order allotting the vehicle to the spouse as part of the allowance. With the signed order and the title, DMV processing for retitling can typically be completed within a few weeks, though time frames vary by county and DMV workload.
  3. Once the vehicle is formally in the spouse’s name, any later transfer for less than fair market value could trigger a Medicaid transfer penalty if it occurs during the lookback period. If the goal is to keep the car with the adult child while protecting Medicaid, the family may instead use the DMV affidavit process directly from the decedent’s estate, or consider a bona fide sale at fair market value with clear documentation.

Exceptions & Pitfalls

  • Medicaid often treats one vehicle as exempt, but luxury or collectible vehicles, or vehicles not actually used for transportation, can raise questions. Reliance on the “one car is always exempt” idea without checking current policy can be risky.
  • If the surviving spouse (or an agent under power of attorney) affirmatively directs that the car go to a child for free or for a nominal price, Medicaid may view that as a disqualifying transfer even if the title never briefly sits in the spouse’s name.
  • Using the year’s allowance or DMV small-estate affidavit without coordinating with Medicaid planning can unintentionally create a paper trail of ownership that later complicates transfer-penalty analysis.
  • Estate recovery in North Carolina focuses on assets that are part of the Medicaid recipient’s estate at death; decisions now about whether the spouse ever takes title can affect what is later exposed to recovery.
  • Because Medicaid rules are layered on top of federal law and state policy, small factual differences (vehicle value, medical status, timing of application) can change the outcome, so a benefits-specific review is important before finalizing the plan.

Conclusion

Under North Carolina law, using probate tools like a year’s allowance or a small-estate DMV affidavit to deal with a modest personal vehicle usually does not, by itself, jeopardize a surviving spouse’s Medicaid because one car is commonly treated as exempt. The real risk arises if the spouse, or someone acting for the spouse, effectively gives away the car for less than fair market value during the Medicaid lookback period. Before claiming or transferring the car, the safest next step is to coordinate the title strategy with a North Carolina Medicaid planning professional so any transfer aligns with current resource and transfer rules.

Talk to a Probate Attorney

If a deceased family member’s only asset is a car and there are questions about how a transfer might affect North Carolina Medicaid eligibility for a surviving spouse, our firm has experienced attorneys who can help explain the probate options and benefit rules. Call us today at (919) 341-7055.

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

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.