Complicated Situation With Inheritance

[LegalChallenge]

What is the name of your state? FL

My Mother-in-law passed away without a will, but in FL the estate goes to the only 2 children to be split 50-50, my wife and my sister-in-law. The estate is pretty much a homestead. There is no other assests other than her home, which needs work to be able to sell.

The sister-in-law is disabled, lives in an assisted living facility, which is provided 100% by Medicaid. She is 38 years old.

Now, here is the problem. When the estate is settled and the home is sold, the sister-in-law will get her half or about $50,000. As soon as that happens, her Medicaid will discontinue. Once that $50K is down to $2K, she would have to re-apply to Medicaid and go through all that paperwork again. We really don't want that to happen.

My questions are these.

1) Can the sister-in-law just refuse her 50% of the inheritance and keep her medicaid in tact?

2) Can we setup a special needs trust for her so that when the home is sold, her 50% can be put in this trust to be used for living needs that Medicaid does not provide?

It's a tough situation. Any thoughts on the best way to go about this?

 

[tranquility]

As to the second, no. You cannot set up a special needs trust at this time. It should have been done by the deceased before death and in consultation with an attorney. It is SILs money on distribution. But then, you have the medicaid problem. The estate must be distributed according to intestate succession which does not include changing the character of the assets.

I don't know the answer to the first. While she certainly can disclaim the amount, many states consider such a disclaimer as a gift which makes them ineligable for medicare for a certain amount of time. See an attorney to see if that is the case in Flordia *before* distribution.

Because of the lack of planning, it seems as though the state will be compensated for some of the money they are out.

 

[Dandy Don]

Consult with an attorney who has experience with Medicaid procedures or with a certified estate planning professional. There are strict rules about how a Medicaid patient must handle their assets and if not done correctly could lead to legal charges against the person for "hiding" assets fraudulently. There may be a way to achieve what you want.

DANDY DON IN OKLAHOMA ([email protected])

 

[LegalChallenge]

But it sounds like a trust is not an option for my sister in law since it wasn't setup before her mom's death?

We really don't want to "hide" any money from Medicaid. Rather, we would like to have some small amount in a trust that can go towards items that Medicaid does not pay for. Things like clothing and certain medical procedures. For example, my wife has been buying clothing for her sister because that is something her sister needs but can't afford on her own because she is permanently diasbled and can't work. She suffered a severe head injury 14 years ago, which lead to a stroke, which caused permanent less of her left side.

Anyway, she had been receiving some Medicaid, but was living with her mom on their own. It wasn't until 4 months ago when her mom became very ill and went into the hospital when she had to go into an assisted living facility.