Sep92025
Probate Q&A Series

What steps handle a Medicaid lien on estate property in an intestate case? – North Carolina

Short Answer

In North Carolina, open an estate and appoint a personal representative, give proper creditor notices (including personal notice to the Division of Health Benefits), and allow the State to present its Medicaid estate recovery claim. If personal property will not cover the claim, the personal representative petitions the Clerk of Superior Court to sell the real property to pay debts in the statutory order, then secures a satisfaction or release before distributing or conveying the property.

Understanding the Problem

North Carolina: an heir asks how to address a possible Medicaid lien on a house and acreage when the decedent died without a will. The decision point is whether the heir must open an estate and follow probate procedures to deal with Medicaid recovery before selling or partitioning the property. One salient fact: there are two heirs (one has counsel) and the property is the main estate asset.

Apply the Law

Under North Carolina law, Medicaid estate recovery is pursued by the State against a decedent’s estate after death. The personal representative must notify creditors properly, including sending personal notice to the Division of Health Benefits if the decedent received Medicaid. The State then presents a claim, which is paid in the statutory order. Real property passes to heirs at death in intestacy, but it remains available to satisfy estate debts; if needed, the personal representative files a special proceeding to sell the real property to pay claims. The Clerk of Superior Court has probate jurisdiction, and real-property sale proceedings to pay debts are brought as a special proceeding in the county where any part of the real property lies. Key timing triggers include the 75-day personal notice window to the Division of Health Benefits and the claim-presentation deadline tied to the published notice to creditors.

Key Requirements

  • Open the estate and qualify a personal representative: An heir applies with the Clerk of Superior Court for Letters of Administration to gain authority to act.
  • Give creditor notices on time: Publish a general notice to creditors and, within 75 days after qualification, send personal notice to the Division of Health Benefits if the decedent received Medicaid.
  • Receive and classify the Medicaid claim: The State must present its estate recovery claim by the non-claim deadline; the personal representative pays valid claims in the statutory order.
  • Use a sale proceeding if personal property is insufficient: Petition to sell the real property to pay debts; name and serve all heirs; venue is where the land is located.
  • Document resolution before transfer: Obtain a satisfaction or release of the Medicaid claim before distributing sale proceeds or conveying title.

What the Statutes Say

Analysis

Apply the Rule to the Facts: With two heirs and a house as the key asset, a North Carolina personal representative should be appointed to administer the intestate estate. The representative must publish notice to creditors and send personal notice to the Division of Health Benefits within 75 days. If the State presents a Medicaid recovery claim and personal property won’t cover it, the representative files a special proceeding to sell the house to pay debts in the statutory order, then obtains a satisfaction or release before any distribution or transfer.

Process & Timing

  1. Who files: An heir or other qualified person. Where: Clerk of Superior Court in the decedent’s county of domicile. What: Application for Letters of Administration (AOC‑E‑202), followed by publishing a Notice to Creditors and later filing the Affidavit of Notice to Creditors (AOC‑E‑307). When: Send personal notice to the Division of Health Benefits within 75 days after letters are issued; creditors must present claims by the date set in the published notice (or within 90 days of personal notice if later).
  2. Evaluate assets and claims. If personal property is insufficient, the personal representative petitions to sell real property to pay debts in a special proceeding in the county where any part of the land lies; serve all heirs. Typical timelines vary by county and whether the sale is public or private with upset bids.
  3. After confirmation of sale, apply proceeds to liens on the property and then to claims in statutory order. Obtain a satisfaction or release of the Medicaid claim from the State before distributing remaining proceeds or conveying clear title.

Exceptions & Pitfalls

  • Medicaid recovery deferrals or waivers: Recovery may be deferred if a surviving spouse is living or if there is a minor or disabled child, and hardship waivers may be available. Procedures can change; confirm current criteria with the State.
  • Skipping probate: A partition or heir sale will not cut off estate creditors. Within two years of death, heir sales made without proper notice to creditors are vulnerable as to the personal representative and creditors.
  • Notice missteps: Failing to send timely personal notice to the Division of Health Benefits can complicate resolution and timing of claims.
  • Wrong forum: The petition to sell real property to pay debts is a special proceeding, and venue is the county where the land is located, which may differ from the estate’s county.
  • Title clearance: Do not distribute or convey without obtaining a satisfaction or release of the Medicaid claim; buyers and lenders typically require it.

Conclusion

To handle a Medicaid lien on estate property in a North Carolina intestate case, open the estate, publish notice to creditors, and send personal notice to the Division of Health Benefits within 75 days. Let the State present its claim and, if personal property is not enough, have the personal representative petition to sell the real property to pay debts in order. Next step: file for Letters of Administration with the Clerk of Superior Court, then promptly issue notices to creditors, including DHB.

Talk to a Probate Attorney

If you’re facing a possible Medicaid claim against an intestate estate with real property, our firm can help you evaluate options, timelines, and the best path to clear title. Call us today.

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.

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.