Hi - my name is XXXXX XXXXX X'X 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.
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"?
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.
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?
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.
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).