Importance of a will for Medicaid planning

For married couples, updating wills and beneficiary designations are important parts of Medicaid planning.

Most of our clients have “I Love You” wills that leave everything to their spouse after their death.

Likewise, their assets have their spouses as the Payable on Death Beneficiaries.  This can be a huge issue if the spouse is receiving Medicaid benefits.

Remember, a nursing home resident can receive Medicaid benefits even if his spouse has assets totaling up to $126,420 (and that does not count one house, a car, or a retirement plan) as long as his assets total less than $2,000. So a Medicaid beneficary’s spouse may have more than a few assets.

This is great news for many families who are trying to not impoverish the spouse at home to pay for the nursing home costs.

If not thought all the way through, though, this can cause big problems if the spouse at home dies before the spouse in the nursing home.

If this couple has traditional “I Love You” Wills, the nursing home resident will inherit his wife’s estate and then be disqualified for Medicaid. His assets after his wife’s death will be over $2,000, and he will lose Medicaid coverage. This means he will have to pay the $8,000-$10,000/month nursing home bill on his own.

Proper planning can help avoid this situation.

If the wife changes her will after her husband moves into the nursing home, she can name a trust or another person to be the inheritor of her estate so that if she predeceases her spouse, he will not lose his Medicaid benefits. The Medicaid laws can be complex, and many couples overlook this possible scenario as they assume the nursing home spouse will die first. There is no guarantee that the ill spouse will die first, and every possible situation should be planned for properly.

If you have questions about how this can affect you or your family, please give our office a phone call for a complimentary phone consultation at (404) 843-0121.