By Steven J. Gibbs, Esq.


The topic of how “good estate planning” may be “bad Medicaid planning” has merited some serious attention in recent years, and this concern seems to be gaining traction in the estate planning world.
Recently, I wrote about the importance of “downsizing your estate” for Medicaid planning purposes and how this applies to proper spousal planning.   Today’s hot topic is a continuation of an important part of that discussion.

A “Medicaid Will”, as I call it, can be a highly effective means to make sure that a spouse is not disqualified from Medicaid if the other spouse dies.

In a nutshell,  if things aren’t handled correctly, a spouse who has been qualified for long term skilled nursing care benefits (Medicaid) could be disqualified when the “well spouse” dies.

Why would a disqualification occur?  Because, an ill spouse can be qualified while allowing the well spouse to retain a certain amount of assets and this savings can be significant if proper steps are taken to prevent an unnecessary “spend down” for the care of the ill spouse.  However even under a best case scenario, if the well spouses passes away, the assets may be deemed to pass to the ill spouse, and Medicaid could then impose a penalty due to the assets now passing to the ill spouses estate.

Even if the well spouse attempts to disinherit the ill spouse, the Medicaid powers that be (DCF) may contend that the ill spouse is entitled to the Elective Share, and thereby attempt to penalize or disqualify the ill spouse.

So, we’ve set the stage for why a Medicaid Will can offer real benefits.  The function of a Medicaid Will is to take the “Elective Share” and direct it into a “Supplemental Fund” for the ill spouse.  To date, this has passed scrutiny under Medicaid’s standards because it is essentially a “Special Needs Trust” that is to be used for non-Medicaid services.  So, this accomplishes two things…it addresses a claim by Medicaid that the spouse should be penalized due to the Elective Share rights, and it also protects the ill spouse’s share by placing it into a supplemental or special trust that is designed to meet the standards for a special needs trust under the current rules.

As I’ve often advised clients, this same strategy can be set forth in a Trust by including the same language directing that the “Elective Share” should be placed in a Supplemental Needs Trust for the surviving spouse.  That said, the Medicaid rules and statutes require that this intention also be specified in the Will, and this is where the Medicaid Will becomes so important.

The future of Medicaid Wills and the standards that will be applied to them by the governmental policy makers remains to be seen.  That said, my belief is that the current policy has upheld them due to the importance of preserving an ill spouse’s means of support in addition to minimal support offered by Medicaid.

Often times, a Medicaid Will is included in an Estate Planning Package as a “Pre-Medicaid Planning” approach.

Even if there are significant assets in the estate, the Medicaid Will is available if one of the spouse’s ever needs long term skilled nursing care and applies for Medicaid.  Of course, under this scenario, there are some additional steps such as transferring all assets to the well spouse, and possibly having the well spouse notify Medicaid of a refusal of support concerning the other spouse.  This kind of strategy should be carefully considered as a part of a customized plan and usually works best when the circumstances are a second marriage involving children from a first marriage.

Just as reminder, there is no “magic bullet” for Medicaid qualification purposes.  As I’ve mentioned in the past, Medicaid is a “need based”, “means tested” program that is akin to welfare for seniors.  So, all of this should be considered with your favorite elder law attorney with the goal of creating the maximum amount of options and preserving as much of the estate as is legally permissible.

With that in mind, as always, I hope this is helpful.

As always, I hope this is helpful and… Until next time.

Steven J. Gibbs, Esq.

Steven Gibbs founded the Gibbs Law Office in January 2009, committed to providing client-centered legal services.
Steve as he would rather be called, is not your typical attorney.  If you appreciate the staunch egotistical mannerism of most firms, you will be delighted with Steve’s unpretentious approach to educating and then assisting his client.  Instead of giving you his complacent and lofty ideas, he would rather pursue your expectations with professional conversation about resolving your concerns under the Law.  It’s your life and it’s his job to make your legal expectations come true while using years of his guidance and knowledge.

Steve was admitted to the Minnesota Bar in 1999, the Florida Bar in 2007 and was recently admitted to the California bar. Keeping abreast of law changes in these three States, as well as the United States, assists him in all aspects of the types of law the firm practices.

Along his career path, he was an associate attorney for an insurance defense law firm; an in-house real estate negotiator for Target Corporation; and corporate counsel for Civix, LLC and Vice President for North American Properties where he was responsible for various real estate transactions, including legal issues and negotiating unresolved business issues.  Prior to opening Gibbs Law Office, PLLC, he was an associate with the firm of Roberts & Engvalson, P.A. where he gained his knowledge of trusts, estate planing and Wills.  He opened his own firm in 2008 and now focuses on laws that will enrich the needs of his clients throughout their lives and those of their children.  The firm has developed a practice dealing only with Trusts and Estate Planning, Wills, Medicaid Planning, Elder Law, Real Estate, Business Law and Probate.

Quoting from Steve “I decided to practice in areas that families will need as they progress down life’s path.  To help them with a solid foundation that will carry them throughout there lives is a rewarding experience for me and my staff.”

Gibbs Law Office, PLLC

8695 College Parkway #2330
Fort Myers, Florida 33919

Phone: 239-415-7495

Fax:  239-243-9029


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