Healthcare Planning for Retirment

Medicare & Social Security Decisions-Be Very Careful

Medicare & Social Security Decisions-Be Very Careful

Question: My wife and I are both elderly, and she has dementia.  At some point, she

will probably have to go into an assisted living facility.  Since I have her power of attorney, I

changed the beneficiary on my IRA’s (3 traditional and 1 Roth) to my daughter.  She is our only

child.  If I die before my spouse and she is in or out of an assisted living facility, will the IRA’s

be subject to the 5 year lookback before she can receive Medicaid?

Answer: The Medicare rules and laws are very complex so I turned to Birmingham lawyer and elder care specialist, Melanie Bradford for her insights. Here’s what she had to say:

“Medicaid rules vary from state to state.  In Alabama, there is a prohibition against a spouse disinheriting

another spouse; such an act should cause Medicaid to impose a transfer penalty for the statutory

elective share.  Currently, there is no prohibition or transfer penalty against a spouse changing

his or her non-probate estate plan; however, this can change at any moment.  The safer course of

action is to work with an elder law attorney that can prepare an estate plan that places assets

equaling the elective share in a special needs trust for the incapacitated spouse.  Such a trust does

not disqualify the spouse for Medicaid.  Instead, it provides for any needs the spouse has that

Medicaid does not cover.    Any funds remaining at the spouse’s death are passed to the children.

This effectively accomplishes all goals by providing for the spouse, preserving the rights to

Medicaid, and passing on remaining assets to children.”

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