Q. My wife was diagnosed with dementia 10 years ago at 58. I kept her home as long as I could, but now she lives in a memory support unit at a great facility. After spending more than $800,000, we started to run out of money. I had to move her to a Medicaid-licensed facility, but she’s not yet on Medicaid. Her mother just died and I’m hoping the inheritance will help us pay for more care before Medicaid kicks in. If my wife gets on Medicaid before the inheritance, the money would go directly to Medicaid. But if my wife dies first, would the money go to our children? And if my mother dies and I receive an inheritance, would that go to Medicaid if my wife is still living?
A. We’re very sorry for your difficult situation.
First, we recommend you consult with an estate planning or elder care attorney who knows all the details of your situation. That’s because Medicaid rules are complicated and even slight variations in the facts can lead to different results.
But in general, an individual will qualify for Medicaid when their assets – measured as of the first day of the month – are below a certain limit, typically around $2,000, said Mary Scrupski, director of estate planning with Prestige Wealth Management in Flemington and Millburn.
Scrupski said if someone owns own assets that are not exempt but are unavailable or inaccessible, for example, an unpaid inheritance like the one your wife will inherit from her mother, the person will still qualify for Medicaid.
“However, as soon as the inheritance is paid out, Medicaid will have to be paid back and then depending on the amount inherited, Medicaid will stop paying until the full inheritance is spent down,” Scrupski said.
As for what assets could potentially go to your children, if your wife were to “disclaim” or refuse the inheritance, this would be considered a transfer of assets and would result in a penalty period during which she would not qualify for Medicaid, Scrupski said.
Keep in mind that during the month the inheritance is received, Scrupski said, you can use the funds to purchase exempt assets such as clothing or other items your wife might need. Only what is left at the end of the month is considered an available asset, she said.
This all doesn’t take into account assets that you as the “community spouse” can keep.
For example, as you are probably aware, your home is exempt, Scrupski said.
“With respect to your own inheritance, any assets you, the community spouse, acquire after your wife qualifies for Medicaid are not considered available to pay for her care,” Scrupski said. “If you inherit the funds from your mother before your wife qualifies for Medicaid, then yes, the inherited assets are considered joint assets and available to pay for her care but not after.”
The timing is critical, she said.
If you are concerned about having to spend your inheritance on your wife’s care, Scrupski said your mother might consider redoing her own will and leaving your share in trust for you or omitting you entirely.
Because this sort of planning is complex and depends on the specific facts, again, we suggest you meet with an attorney who is experienced in these difficult situations.
Email your questions to moc.p1544823171leHye1544823171noMJN1544823171@ksA1544823171.