Is Your Spouse Disabled? 3 Ways You Will Need To Alter Your Estate Plan
You may already have an estate plan in place for you and your spouse and think that everything is set. Unfortunately, you will have to alter your estate plan if your spouse becomes disabled. This is because your disabled spouse will need financial protection in the event that you are unable to take care of them. Here are three things you will need to do.
Transfer Assets As Soon As The Disability Happens
Any assets that are owned jointly between you and your spouse should be transferred to your name only as soon as your spouse becomes disabled. This so that your spouse will meet the qualifications to receive Medicaid benefits.
If your spouse needs to go into a nursing home, they must have less $2,000 in personal assets to receive those benefits. Simply transferring the remaining assets to yourself should be enough to help them qualify for receiving Medicaid.
Remove Your Spouse As A Beneficiary From Your Life Insurance
Life insurance can be a great way to help pay for the supplemental care that is needed by your spouse if you were to die before them. Be aware that if they were to receive the payout of your life insurance then they will no longer qualify for Medicaid.
If your spouse has already been living in the nursing home, all of their inheritance will go towards paying the nursing home bills until they reach $2,000 in assets once again. With nursing homes costing around $90,500 annual, it will not take long for their inheritance money to be gone for good.
Create A Trust For The Life Insurance Inheritance
Work with an estate planning attorney to create a trust for any life insurance inheritance that your spouse receives. The goal is to set up a special needs trust that is only used for funding their supplemental care, and to protect it from being taken by the nursing home they are in. Even if you do not have life insurance, a trust can be funded by personal savings and property that is in your name.
There is not a legal limit to how much money can be in this kind of trust, and thankfully, Medicaid doesn't consider these trusts when determining if your spouse is eligible.
It will feel weird removing your spouse from your joint assets, but keep in mind that it is to protect these assets after you pass away. It will help keep the bulk of the costs paid for by Medicaid and preserve the remaining assets for your kids.
For professional estate planning, contact a lawyer such as Donald B Linsky & Associate Pa.