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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 34363
Experience:  16 yrs estate law, real estate. Wills/Trusts/Probate
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My father in law recently passed away and has left the money

Customer Question

My father in law recently passed away and has left the money which was left in his personal accounts to his 3 children. I have 1 sister in law who has lived at home her entire life and will be needing to move out of the current home. She will also need to apply for Medicaid and any other state benefits that she may qualify for. Can she apply for these benefits if we start her a trust account with the money that she has currently received? I have asked this question to several people and received several answers. The 3 children will also be selling the home and splitting the sale. She currently only brings home about $100 / week at the same job she has had since 1993. Any suggestions? She has the cashiers check from the closed account, but we (as a family) don't want it to expire. He also did not have a will. Does this effect us starting a trust account?
Submitted: 3 months ago.
Category: Estate Law
Expert:  Barrister replied 3 months ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Can you tell me what state this is in?

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How much money are we talking about?

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Does she have any other assets?

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thanks

Barrister

Customer: replied 2 months ago.
Texas
$31,000
She owns her car & is also 1/3 owner in the house.
Expert:  Barrister replied 2 months ago.

Ok, this presents a problem because if she is going to apply for Medicaid, she will have to "spend down" any assets until she only has $2,000 since Medicaid is a poverty based program. Since she has already received the money, she can't protect it with a third party special needs trust now...that would have to have been done by the testator in the will so she never actually received the money. So if father in law didn't direct for a third party special needs trust to be set up with her inheritance, then it is too late now.

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If she is not legally competent, then a first party special needs trust could be set up by her legal guardian or the court to hold that money, but at her death, Medicaid must be reimbursed out of those assets left in the trust. This type of trust must be set up before the special needs person reaches age 65. Trust money can be spent on almost anything that will help improve the quality of care and quality of life of the special needs person. For example, Special Needs Trust money may be used to pay for education, recreation, entertainment, travel, dental, nursing care, mental health care, speech, physical or occupational therapies, rehabilitation, counseling, care management, or advisors for legal, financial, tax or government benefits matters.

The only way to completely protect it now would be for her to get the money out of her name and put off applying for Medicaid for 5 years and a day so as to get out of the "lookback period" for asset transfers.

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She could use the money to pay down any debts she has as that is an allowable spend down but she is going to have to use up those assets down to the $2K level on her own care before she is Medicaid eligible if she is disabled or over 65.

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If she is disabled, then she would likely qualify for SSDI, which is Social Security Disability, as well as programs like food stamps and even Section 8 housing.

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But in order to properly draft a Special Needs Trust, she (or you) would need to sit down with an experienced estate planning attorney to go over her situation and plan how best to protect her assets. The money spent on a good estate planning attorney will normally result in a huge savings over just letting the government force her to pay for her own care.

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thanks

Barrister

Customer: replied 2 months ago.
Thank you so much for your response.So, since she is in need of a new vehicle, she could spend it on that & would actually help her in the long run. She has already been approved for Section 8 housing, just waiting on availability. She doesn't really have any debt to pay down at this point except for the house expenses that she is still living in. Until she gets her available housing, she will have to continue to pay the monthly bills that are currently active.
Expert:  Barrister replied 2 months ago.

You are very welcome. Happy to help any time.

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So, since she is in need of a new vehicle, she could spend it on that & would actually help her in the long run.

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That would be an excellent way to spend down money on an exempt asset.. So if she traded in her existing car and bought a newer, better one, that would be an allowable expense..

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If you feel your original question and any related follow ups have been answered, I would very much appreciate a positive rating on the answer I have provided as that is the only way I receive credit for my work. If you have a new question the JustAnswer folks require that you start a new question page, but you can request me by putting "For Barrister" in the caption and they will get it to me.

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thanks much

Barrister

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