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How Medicaid Benefits Can Impact Your Family's Inheritance

Posted by Daniel J. Eccher, Esq. | Oct 11, 2020

An inheritance can be the source of costly mistakes related to Medicaid eligibility - mistakes that should be avoided. When a person is drawing Medicaid benefits and inherits money or property, that inheritance can jeopardizes their benefits. The inheritance must be handled carefully to minimize expensive penalties. What “carefully” means, though, can be misunderstood without the necessary expertise. 

The Right Steps for Handling Inheritance 

The best idea is to call an experienced elder law attorney like one of us. (An even better idea is to call us well before any inheritance becomes a “problem.” The sooner you call us, the more money we can likely protect for you.) 

An Ohio attorney was recently suspended partly because he mishandled this Medicaid-inheritance issue. The mistaken advice was that to protect the benefits, the person who stood to inherit should “disclaim” or “renounce” the inheritance – in other words, give it away to someone else. That advice would have been OK in the tax context, but it was not OK in the Medicaid context. The Medicaid rules count inheritances regardless of whether the recipient keeps them or passes them on to someone else. The result in such cases is that the person receiving Medicaid would be charged just as if he or she had taken the money, even if he or she gave it away, and the person's benefits would be docked accordingly. Such a misstep can be a very expensive. 

A better move would be to consult an elder lawyer immediately. We can advise you on necessary techniques to split the inheritance between the recipient and somebody else, like a child. If the right strategies are used, Medicaid would count the inheritance to an extent, but not as much as it would have if the recipient had simply given away the whole sum. 

The outcome would be even better if the person leaving the inheritance had consulted us first. We know how to structure clients' financial arrangements to protect the people to whom they want to leave a legacy. 

About the Author

Daniel J. Eccher, Esq.

Daniel J. Eccher, Esq. is the Managing Shareholder at Levey, Wagley, Putman & Eccher, P.A., in Winthrop, Maine. Dan's favorite problem to solve is helping clients figure out how to afford long-term care while having something left for their family.

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