We can be very successful through various planning means in protecting assets for a married couple through the well spouse, or the one who is not in the nursing home (known in Medicaid-speak as the community spouse).
But, what if that spouse happens to be the one who dies first?
Most married couples have what we call Sweetheart Wills or Living Trusts, that essentially leaves everything to the other spouse when one spouse dies. Unfortunately, this can be a Medicaid disaster if the well spouse (community spouse) dies first. Their entire estate is left now to the spouse in the nursing home who can only keep $2000 of it and needs to spend everything down.
In this Elder Law Minute, Wes Coulson, Southern Illinois Elder Law attorney, discusses another topic from the video series Married Couples and Medicaid and offers advice on how to protect assets through Medicaid-sensitive estate planning if the “well spouse” should die first.
Married Couples and Medicaid: What Happens If the “Well Spouse” Dies First?
Hello, I’m Wes Coulson and this is your Elder Law Minute. This is another in our series of how the Medicaid eligibility rules impact a married couple. One of the things you’ll learn, from the website and listening to these videos, is that we can be very successful through various planning means in protecting assets through the well spouse, the one who is not in the nursing home (known in Medicaid-speak as the community spouse). But, that opportunity also raises a concern and a challenge and that is:
What if that spouse happens to be the one who dies first?
It’s a very real concern, the burden of being the caregiver for an extended period of time, trying to keep someone with Alzheimer’s out of the nursing home for as long as possible really weighs on the well spouse, not just physically but mentally and emotionally, as well.
So, here’s the concern. Most married couples have what we call Sweetheart Wills or Living Trusts:
“Sweetheart, I love you. If I die first, I leave everything to you.”
“Darling, same here. If I die first, I leave everything to you.”
The problem is, that is a Medicaid disaster because it means that the well spouse’s, or supposedly well spouse’s, entire estate is being left now to someone who can only keep $2000 of it and needs to spend everything down.
So, there is a very particular solution to that. It is something known as Medicaid-sensitive estate planning. The key to it is leaving things not to each other but rather for each other in a particular way that causes it not to be counted as an asset for Medicaid purposes. So, if you’re a married couple and you have one spouse with Alzheimer’s, this planning is something that’s just absolutely essential for you to engage in. Give us a call, we can help. Thanks.
For more information on planning for married couples, visit these articles:
- Sweetheart Wills and Trusts: Are they the best option?
- Married Couples and Medicaid: How Much Assets Can the Community Spouse Keep?
- What’s the Difference Between Estate Planning and Asset Preservation Planning?
“Your Trusted Advisor on the Elder Care Journey”
Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (618) 632-7000 or (314) 567-9292, or Contact Us and we will get in touch as soon as possible.