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How Not to Lose Medicaid (Part 3)

In last week’s post, I was explaining that the death of the non Medicaid spouse impacts the continued eligibility of the Medicaid spouse.  That’s because the Medicaid spouse’s income and/or assets may change.  The asset change is the more complicated one, in part because the estate administration process takes time.  

An application must be submitted to the Surrogate to admit the will and appoint the executor.  If there is no will, an application must be made to appoint an administrator.   Whether there is a will or not, the surviving spouse is entitled to a minimum amount – the elective share – which is 1/3 of the deceased spouse’s estate after certain deductions and less what the surviving spouse already has in his or her name (next to nothing if on Medicaid).

Assets need to be valued as of the date of death.  In many cases there are choices that can be made as to which assets to give to the surviving spouse.  For example, if there is real estate that the deceased spouse owned with others, that can be a good asset to give to the Medicaid spouse.  If the other co-owners refuse to sell, the asset is considered inaccessible.  In other words, Medicaid can’t require the sale and spend down of that asset, meaning ownership will not count towards Medicaid’s asset limit.

The estate administration process can be a slow one, especially if we need to calculate the elective share.  On the other hand, there may be non probate assets such as accounts with payable on death designations to the spouse that will quickly result in assets exceeding the $2000 asset limit.  Attention must be paid to quickly addressing these changes as they are happening.

So what happens when the surviving spouse receives assets?  Does that mean the automatic loss of Medicaid or are there other options?  We’ll cover that next week.