Wednesday, October 03, 2012
When a nursing home spouse applies for Medicaid benefits in Michigan, the "community spouse" is entitled to keep exempt assets ( for example, the home) plus a predetermined asset allowance. With the help of a knowledgeable elder law attorney, a community spouse often protect and preserve 100% of the assets through various methods (see this blog, community spouse asset protection).
However, Medicaid eligibility for a nursing home spouse is really only half the job. A community spouse MUST revisit his or her own estate plan in order to fully protect and preserve assets.
Why? Most husband/wife estate plans, whether via trusts or wills, leave the entire estate to the "surviving spouse." This can be disastrous, however, when the surviving spouse happens to be in a nursing home and receiving Medicaid benefits. The nursing home spouse, as an heir to the spouse's estate, will almost surely result in Medicaid disqualification should the community spouse predecease the nursing home spouse.
As such, it is imperative that our "community spouses" revisit their estate plan. Often, an updated plan will by- nursing home spouse, transferring assets to the clients' children should the community spouse die first. This is not to punish the nursing home spouse, of course. Rather, this type of plan acknowledges that the nursing home spouse is financially covered by Medicaid and that assets will be preserved with the family."