Medicaid and Elective Share

Question:   My wife suffers from Alzheimer’s.  Currently, I am her primary caregiver, but I am worried that if I predecease her, she will need to go to a nursing facility.  One of my friends suggested executing a new Last Will & Testament that disinherits my wife and leaves my estate to my children.  Should I do this?

Answer:  While updating your estate planning documents is a good idea, simply disinheriting your spouse may not protect your estate in the event she needs to go to a nursing facility.  If your wife requires care in a nursing facility and wants to rely on Chronic Medicaid to pay for it, the Department of Social Services will conduct a five-year lookback.  During the examination, the Department of Social Services will inquire whether your wife received her “elective share” from your estate at the time of your death.  If she did not receive her elective share, the Department of Social Services will issue a dollar for dollar penalty which will delay her Chronic Medicaid benefits.

An elective share ensures that surviving spouses in New York receive the first $50,000.00 or one-third of an estate, whichever is greater.  Therefore, if you pass away with $300,000.00 in your estate, your wife would be entitled to $100,000.00 even though your Last Will & Testament excluded her.  If her elective share of $100,000.00 is not paid to her from your estate, the Department of Social Services will issue a penalty of approximately seven (7) months.  In other words, Medicaid will not pay for the first seven months of care in the nursing facility.

There are options available to you now in order to preserve your estate even if your wife requires care in a nursing facility.  One option is to set up a Supplemental Needs Trust through your Last Will & Testament that benefits your wife but protects the estate.  You would appoint a Trustee to manage the assets in the Trust on behalf of your wife.  The Supplemental Needs Trust is a vehicle to supplement and not supplant government benefits.  This would allow the money to be used for your wife’s benefit but not interfere with an application for Medicaid benefits.

It is important to review your estate planning documents with an Elder Attorney in your area to ensure you and your wife are protected and have the appropriate documents in place for your specific situation.