Personal Needs Accounts - Distribution Requirements

The question often arises as to how to dispose of a nursing home personal needs account upon a resident's death. According to the New York State regulations pertaining to nursing homes, if a resident's funds exceed $50, the facility has to deposit the funds in an interest bearing account(s) that is separate from any of the facility's operating accounts. The facility must credit all interest earned on the resident's funds to his or her account.

In pooled accounts, a separate accounting is required for each resident's respective share. If the funds are less than $50, the facility may maintain the funds in a non-interest bearing account or petty cash fund.

According to the same regulations, within 30 days of the death of a resident who had a personal fund deposited with the facility, the facility must render a final accounting of those funds to the individual or probate jurisdiction administering the resident's estate.

It is important to note that a nursing home resident receiving Medicaid benefits will typically not have funds in excess of $13,800. Families often want to know if it is necessary to administer or probate an estate valued at such an amount. The New York Surrogate's Court Procedure Act (SCPA) §1310 addresses payments of certain debts without administration. Debt is defined as money payable on account of a deposit in a bank, national bank trust company, savings bank.....; money payable by an insurance company, a public corporation, a pension, retirement or death benefit, profit share, [among other entities].

"Debtor" is defined as a person or agency that owes a debt to another. Creditor" is defined as a person or beneficiary to whom the debt is to be paid.

Upon the death of the resident, unless a beneficiary is designated on the account, the debtor (i.e. nursing home, bank, financial institution, etc.) can pay the surviving spouse no more than thirty thousand ($30,000) dollars with only an affidavit made by the spouse showing that all payments received do not exceed thirty thousand dollars.

Not less than thirty days after the death of a creditor, unless there is a beneficiary designated, the debtor can pay no more than fifteen thousand to the surviving spouse, one or more children (18 or older); parent, sibling, niece or nephew, creditor or someone who paid funeral expenses.

Payment may only be made upon an affidavit by the relative showing (i) at whose request the payment is being made; (ii) showing the date of death; (iii) relationship to the decedent; (iv) that no fiduciary (i.e. executor or administrator) has been appointed; (v) the names and addresses of the people entitled to receive the money and (vi) that all payments made do not total more than fifteen thousand dollars. The affidavit should be provided by the nursing facility's finance office to initiate the distribution process.

What all this means for a nursing home is that, despite the nursing home regulations pertaining to personal needs accounts, NY State law allows the facility or any bank or financial institution to release funds without formal estate administration, i.e. probate, pursuant to NY State law, as long as there is an affidavit that complies with the statute.