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Pop Quiz for June 10, 2015
The Story: Harold is in a nursing home and he is receiving Medicaid benefits. His wife, Mary, has a Last Will and Testament that leaves all her assets to Harold, if she dies first.
Question: What are the consequences to Harold’s Medicaid benefits, if Mary dies first?
What is a better estate plan for Mary?
Answer: If Mary dies before Harold and leaves all her assets to him, this will disqualify Harold from Medicaid benefits, because Harold can only own $2,000 in assets. If Harold disclaims his inheritance from Mary, it is expected that FSSA will deem this disclaimer as a transfer and there will be a transfer penalty. A better plan is for Mary to leave Harold his statutory share of her estate in a trust to be used for Harold’s benefit during his life and the remainder will go to their children.