How to Care for the Nursing Home Spouse and Still Pass on an Inheritance to the Children
Mr. and Mrs. Smith have been residents of Greensboro for nearly 30 years. Several years ago Mrs. Smith began to develop memory problems and in recent years she was diagnosed with Alzheimer’s.
Mr. Smith loved his wife, Carol, very much and cared for her, at home, for as long as he could. When he could care for her no longer, he placed her in a nursing home ad then went to an elder law attorney for advice. Mr. and Mrs. Smith had approximately $150,000 in assets, and with planning, Mr. Smith was able to raise the Community Spouse Resource Allowance and nearly retain the entire $150,000 even while Carol was on Medicaid.
Within 90 days after Carol qualified for Medicaid, Mr. Smith had to move all of their assets from his and her names into his name alone. As long as he was alive, he knew he could provide the extra things which Carol would need and that Medicaid might not cover. He was concerned, however, as to what would happen in the event of his death. He wanted to provide for Mrs. Smith and still leave something for their children.
As part of the planning, he set up a will with a special testamentary trust. His attorney explained to him that the laws passed years ago, (OBRA-93) allow an individual to create a Supplemental Needs Trust for his surviving spouse, to provide the extras that Medicaid will not cover, without the funds in the trust being counted for Medicaid purposes.
The law is very specific and states that only a special needs trust, created through a will that has gone through probate, will qualify for these special protections. In addition, the assets in the testamentary special needs trust will also be free from estate recovery.
The bottom line is that Mr. Smith will be able to provide any extras that Carol might need without disqualifying her from Medicaid while at the same time preserving the bulk of those assets for the children.
Needless to say, Mr. Smith is quite happy that he was able to find a way to protect the assets, while they are alive and when both he and Mrs. Smith are passed on.