Inheritance Disclaimer and Medicaid

There was a question from a reader regarding whether a medicaid recipient can disclaim his inheritance. In this situation, a 89 year old man has been in a nursing home for 3 years and for the last 2 years he has been on medicaid. He had very little assets and once those resources were depleted he applied for and obtained medicaid to cover his stay in a nursing home. Now a relative has died and in their will left the 89 year old an interest in a home which when sold will yield him about $125,000. He prefers to disclaim this inheritance to enable a younger relative to inherit. Can he do this?

In order to answer that question, you must review the federal medicaid law and the state law interpreting and implementing that law. Unearned income is consider a resource for medicaid purposes and an inheritance is unearned income. But, if you disclaim an inheritance you never get this unearned income. However, does this disclaimer amount to a transfer of assets which brings with it a penalty for eligibility? Does medicaid have to be informed regarding the inheritance and the disclaimer? If the 89 year old should proceed to disclaim, there will be potential objections from medicaid and who would win depends upon all the factors mentioned.

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Jimi Hendrix - Never Wrote Will

Music legend Jimi Hendrix died at age 27 in 1970 without a will. Since he did not plan for the distribution of his estate, the State contolled the distribution of his assets. Based upon the State laws, Jimi Hendrix's entire estate went to his father. Though he had a brother who he was reportedly close to, his brother received nothing.

His father did leave a Will when he died. His father's estate (including his inheritance from Jimi) still did not go to any relatives of Jimi. His father had remarried and his estate was left to his new family.

None of us are promised tomorrow. It is better to be prepared than not prepared. Share your comments here or contact us at www.ythlaw.com

Incentive Trusts

Do you want to make sure your beneficiaries do not misuse their inheritance? Well, your trust could be drafted in such a way to provide incentives to direct your loved one on the right path. When things go as you direct, money is earned. When they fail to meet your expectations, the money is held until they do. This can be for anything that you feel is important.

We all may know situations where children have encountered problems including drug, alcohol or gambling addiction. How can that be handled when you are no longer available to help them? The Incentive Trust can be there for them to get the necessary help. It can also serve to teach children to be fiscally responsible. If they "earn" their own money, the trust could match their earnings. The options are as limitless as the situations that exist.

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ESTATE - What Does it Mean?

Yesterday I received a call from an adult child of one of my 80 year old clients. My client is in great physical and mental health. She understands the importance of getting her affairs in order and further understands that with 4 children she needs to provide direction on the handling of her affairs.

Well, her son's concerns were expressed as follows:

"My mother does not have an "estate". There is nothing "complex" about what she has. Therefore, she does not need any "estate planning". Her children can take care of her affairs for her."

My answer to him was to help him understand just what an "estate" is. So, I said:

"Your mother's "estate" is not just about tangible things but the intangible as well. On the tangible side, she has (1) her home which is very valuable - great location, well maintained and no mortgage; (2) her original art work and (3) some antiques. On the intangible side, she has (1) one child in transition after a divorce and needs to have a place to stay with her children; (2) her other children whom she would like to leave an inheritance; (3) her passion as an artist that is also a part of her legacy. More importantly, your mother would like for her wishes to be known and not have her children in disagreement over the handling of her affairs."

I encourage families to sit down and discuss these matters because he represented what could happen if there are no plans, children second guessing the wishes of their parents. With an estate plan there is no second guessing.

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Wow!!! You Hit the Lottery, Now What?

In these economic times we still have people hitting the lottery for millions of dollars, inheriting millions, and making fortunes on certain investments. Are you prepared for a financial windfall? I would venture to say that many are not. I would further venture to say that EVERYONE should be because what it takes to be prepared for a windfall is what it takes to be prepared for LIFE!!

Here are my lessons for life as it relates to Winning The Lottery!!!

1. Too much of a good thing is not a good thing. Do not take a lump sum payment. Take the money over time. It gives you time to think rationally and even to learn more about what you have and what you really need.

2. What you don't know CAN hurt you. Learn about money. Educate yourself by taking a course on money management and investments. You have the time and money and it is well worth it.

3. You Can't Take It With You. You need to make a will. A will represents your wishes regarding the distribution of your assets. Without a will, you leave it to the state and can create disharmony among your family. A little planning goes a long way.

4. Help Those Who Help Themselves. Many people will ask for help along the way and some immediately upon knowing of your good fortune. But ask them, what are you doing to help your situation? Do not just go on what they say, go on what you know. People do not change with a hand out.

5. Know Your Friends. Your true friends expect nothing from you that they were not already getting before your windfall.

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Updating Your Will

Life if funny you know. It has a way of bringing you such great joy and at other times such overwhelming pain. But, through it all we keep on doing what we need to do. I had clients who came in to have their estate planning done when there was much to celebrate in their life; successful job, great kids. Within two years they were back to update their documents because the husband, not yet 60,was diagnosed with Alzheimer's. Changing life circumstances represent a time to review and possibly update your will and other estate planning documents. Other considerations for updating your will and other estate planning documents include:
(1) Moving to another state
(2) Marriage
(3) Birth of a child
(4) Divorce
(5) Death of a loved one
(6) Disability
(7) An Inheritance

We are here to assist you. Leave your comments or contact us at www.ythlaw.com