Applying for Medicaid - Estate Planning Changes

Wednesday, June 7, 2023

    Generally once one spouse has qualified for Medicaid, there will be a need for the other spouse to re-do their estate and incapacity planning.

    First, of course, the ill spouse is generally unable to serve as executor of the well spouse’s estate if the well spouse dies first, or to exercise power under a power of attorney document, or make medical decisions for the well spouse, or the like.

    In addition, it generally no longer makes sense for the ill spouse to benefit under the Will or Trust of the well spouse, if the well spouse dies first.
    There are limits to the extent to which an ill spouse can be cut out of the Will or Trust of the well spouse, but to the extent possible, it is generally best to cut the ill spouse out, so that the money can go to children or other beneficiaries, rather than going to the ill spouse, where it will be spent on health care that Medicaid would otherwise provide, or where it will have to be repaid to the State to reimburse the State for money the State has already spend on Medicaid care for the ill spouse.

    The ill spouse seldom needs a new estate or incapacity plan, since their plan was generally to benefit the well spouse insofar as possible, and to have the well spouse handle their affairs when they can no longer handle their own affairs - all of which is what is happening anyway in most cases.

    Redoing the well spouse’s estate plan can save the family hundreds of thousands of dollars in some cases.

    Redoing the well spouse’s incapacity plan can save the need for a guardianship or a conservatorship if the well spouse is ever unable to handle their own care needs or their own finances.  This can save many thousands of dollars, as well as making things far less stressful if the need for such things ever emerges.