San Antonio Express-News MySA.com Copyright 2011, Paul Premack
August 26, 2011
should be an integral part of Medicaid Planning (Part 2)
Last week, this column analyzed a strategy to maximize the funds
which can be set aside under current law, when one spouse may need
Medicaid in the future. A reader with initials T.R. stated that his wife’s
worsening dementia caused her to need nursing home care. I suggested that
he be in contact with Medicaid immediately, so that he could maximize the
spousal protected resource allowance granted by law.
would legally allow him to keep more money for his own security. It would
allow him to be sure his home was in good repair and that he had a
reliable car. It would allow him to prepay for funerals for both himself
and his wife. It would allow Medicaid benefits to begin at an earlier
But T.R. said in his letter that he and his wife have Wills
in which they leave all assets to each other. If T.R. were to die in a car
accident (or however) while his wife is still in the nursing home, his
Will says she inherits all the assets. Since he would have died, she would
have no more spousal protected resource allowance. She would own the
house, car, personal effects and – from our example last week – the
$100,000 bank deposits they still possess.
Because she would then
own those assets, and have no spousal protected resource allowance, she
would lose Medicaid. The rest of the money would be used to pay for the
nursing home, and when it is gone she would have to reapply for Medicaid
(and because she has dementia, someone else would have to oversee her
funds, handle the application for Medicaid, and watch over her needs).
If she survived two more years, then upon her death Medicaid would
make a claim against the house under MERP. Nothing would be left. It would
all have gone to pay the nursing home or to MERP as reimbursement for
Instead, T.R. should utilize an intelligent strategy:
First, he and his wife must agree that all of the assets belong solely to
him as his separate property. This must be done in a written legal
agreement that complies with the provisions of the Texas Family Code. If
her dementia is too severe for her to understand and sign, there is one
other option. She made T.R. agent in her durable power of attorney.
If her durable power of attorney was drafted by a qualified Elder Law
Attorney, it should include a provision on transfer of assets. Under that
clause she will have granted the agent authority to transfer funds that
belong to her so that T.R. becomes the sole owner. (Also, she should have
named several alternate agents who can act in case T.R. has become
Second, T.R. as the sole owner of all the assets
must make a new Will leaving the assets to someone other than his wife.
That could be their children, or it could be a “special needs trust” that
would last for the rest of her lifetime (and then pay to his devisees).
When the Elder Law Attorney helps with the property agreement, T.R. should
have a new Will prepared at the same time.
If he outlives his
wife, she still has a Will leaving all assets to him. But she does not own
any assets; they are already T.R.’s sole property. Thus, this strategy
allows him to avoid probate of her Will.
On the other hand, if
T.R. dies before his wife, she will not inherit anything. She continues to
own nothing. The money, house, car and personal effects safely pass to his
devisees. She remains qualified for Medicaid. Eventually when she dies,
there are no assets against which a MERP claim can be made.
proactive and taking action has legally protected their home, has legally
maximized the value of their protected funds, and has helped the economy
(by spending about half of their life savings on home repairs, an auto,
medical care, travel and legal planning). They have protected their
children by providing an inheritance, and maintained uninterrupted care
for the wife. If this strategy sounds beneficial under the circumstances
you face, consult with a Certified Elder Law Attorney at your earliest
Disclaimer: This column answers a specific
legal question asked by an individual in Texas. The answer may or may
not match your individual situation. Be careful not to treat this
column as specific legal advice, as it may not meet your individual
needs. It may give you a solid basis for discussion with your own
You should consult with your personal
attorney before you take any action on this or any legal issue.
Also, please be aware that laws change, so this column is valid only
as of the date it was published. This communication does not create an
attorney-client relationship between the author and the reader.
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Paul Premack is Certified as an Elder Law
Attorney ( CELA ) by the National Elder Law Foundation as accredited by
the Texas Board of Legal Specialization and tthe ABA. He is licensed to pracice law in Texas.
Benjamin Premack holds a JD and a Masters Degree in International
Affairs, and is licensed to practice law in Washington State and in