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Roger
Roger, Attorney
Category: Estate Law
Satisfied Customers: 26954
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My mother is currently on Medicaid, and living in an assisted

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My mother is currently on Medicaid, and living in an assisted living facility in Grand Rapids, MI. Her mother passed away in January, 2006, with the her only asset being some apartments that were part of a government program. A trust was established in my grandmother's name prior to her death, with my aunt (my mother's sister) as the Trustee for the estate. Since my grandmother's death, my aunt and uncle have worked tirelessly to get those apartments released from the government program they were a part of, and have done so successfully.

As a result, there is $74,500 available to be distributed in two equal shares to my mother and her sister (my aunt). My question is, "What are my mother's options as far as handling this inheritance without jeopardizing her Medicaid coverage?"
Submitted: 1 year ago.
Category: Estate Law
Expert:  Roger replied 1 year ago.

Hi - my name is XXXXX XXXXX I'm an Estate Law attorney.

 

Your mom's inheritance will be counted as income in the month it is received. Therefore, if she were to receive an inheritance and the amount puts her over the income limits for your state ($2,000 in most states), she will not be eligible for Medicaid for at least that month.

 

If she can properly spend down the money in the same month it is received, however, she will be eligible for Medicaid again the following month. The first thing to do is pay the nursing home for the current month (at the Medicaid rate).

 

Because she would still have a significant amount of money left, a local estate law attorney can advise her on the proper way to spend down the money. She may be able to give it to a spouse (if one), pre-pay an irrevocable funeral contract and set up an irrevocable trust to hold the money (the government will not consider the inheritance income if it is in an irrevocable trust).

 

The other alternative is that your mother could waive her inheritance, which all of the money would go to her sister.

Customer: replied 1 year ago.

Hi, Kirk.


 


Thank you for your quick reply.


 


So, there is no way to avoid disqualifying her from Medicaid for at least a month? She, previously, before qualifying for Medicaid, already purchased an irrevocable funeral contract.


 


But if an irrevocable trust is set up, and the inheritance is distributed directly into that account, does that protect her coverage, since you said, "the government will not consider the inheritance income"?


 

Expert:  Roger replied 1 year ago.

If she receives any money, it is going to count against her for at least that one month. But, if she puts the money into the irrevocable trust, she should only be looking at one month of ineligibility.

I don't think it is possible for her to have the money transferred straight from her mother's estate to the trust because the trust is not the beneficiary of her mother's estate - - she is. So, the money will have to go to her and then to the trust.

If she accepts the inheritance, the best she can expect is to lose one month of Medicaid coverage.

Expert:  Roger replied 1 year ago.
Please let me know if you have any additional questions. Also, please take time to positively rate our conversation so I may receive credit for my time. Thanks!
Customer: replied 1 year ago.

Would it be legal for my mom to waive her inheritance, have all the money go to her sister, and then have her sister "gift" the money back to the irrevocable trust that I set up for her?


 


Would that in any way protect my mom from the income hit?


 


Also, what other options are out there for appropriate spend downs? Can she "gift" that money to me and my siblings? This would still disqualify her from Medicaid for at least the one month, but would that be an appropriate and/or legal spend down?

Expert:  Roger replied 1 year ago.

Your mother can waive her inheritance by executing a waiver form.

 

Your aunt certainly could then establish an irrevocable trust and place the money in it.

 

Yes, if your mother never receives/inherits the money, then she would not have to disclose income because she never received it.

 

The spend downs would still interrupt her Medicaid for the month she receives her inheritance. Appropriate spend downs are outlined at the following link: http://www.nls.org/medicaid/spenddow.htm . There could be other ways, but these are the most common.

 

Also, the best way to move around a large amount of money is through the irrevocable trust.

Roger, Attorney
Category: Estate Law
Satisfied Customers: 26954
Experience: BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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