By Nancy Burner, Esq.
We are frequently asked whether it is a good idea to disinherit your spouse due to the possibility of nursing home care in the future. While updating your estate planning documents is a good idea, simply disinheriting your spouse may not protect your estate in the event she or he needs to go to a nursing facility.
If your spouse requires care in a nursing facility and wants to rely on Chronic Medicaid to pay for it, the Department of Social Services will conduct a five-year lookback.
During the examination, the Department of Social Services will inquire whether your spouse received his or her “elective share” from your estate at the time of your death. If your spouse did not receive his/her elective share, the Department of Social Services will issue a dollar for dollar penalty that will delay Chronic Medicaid benefits.
An elective share ensures that surviving spouses in New York receive the first $50,000 or one-third of an estate, whichever is greater. The surviving spouse has a time limit when he or she must demand the elective share. If the elective share is not demanded within the time frame, the surviving spouse forfeits his/her right to receive the share.
For example, if you pass away with $300,000 in your estate, your spouse would be entitled to $100,000 even though your last will and testament specifically excluded your spouse. If the elective share of $100,000 is not paid from your estate, the Department of Social Services will issue a penalty of about seven months. In other words, Medicaid will not pay for the first seven months of care in the nursing facility.
There are options available to you now in order to preserve your estate even if your spouse requires care in a nursing facility. One option is to set up a supplemental needs trust through your last will and testament that benefits your spouse but protects the estate. You would appoint a trustee to manage the assets in the trust on behalf of your spouse.
The supplemental needs trust is a vehicle to supplement and not supplant government benefits. This would allow the money to be used for your spouse’s benefit but not interfere with an application for Medicaid benefits. Another option would be to provide that your spouse receives one-third of your estate and the reminder goes to your children.
Finally, in New York State, we have a program called Community Medicaid, which will pay for a home health aide to come into your home and assist your spouse with activities of daily living. If your spouse received this assistance in the home, there would not be a five-year lookback and he or she would not be required to elect against your estate. This may be a viable option now, so you are not the sole caregiver.
It is important to review your estate planning documents with an elder law attorney in your area to ensure you and your spouse are protected and have the appropriate documents in place for your specific situation.
Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.