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Inheritances and Medicaid: Be Careful, Plan Ahead

Inheritance and medicaid

Costly mistakes can be made when it comes to inheritances and Medicaid.

When a person draws Medicaid benefits and inherits money or property, that inheritance jeopardizes the benefits. The inheritance must be handled carefully to minimize expensive penalties. What “careful” means, though, can be misunderstood without the necessary expertise.

The first and best idea is to call experienced attorneys like 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 okay in the tax context. It was not okay in the Medicaid context. The Medicaid rules count inheritances regardless of whether the recipient keeps them or passes them on to someone else. The bad 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. This can be a very expensive misstep.

The better result would be to consult us immediately. We can advise you on the 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 if the recipient had simply given away the whole sum.

An even better result would be if the person leaving the inheritance consulted us first. We know how to structure that person’s financial arrangements to protect the people to whom the person wants to leave his or her legacy.

Elder law is a law unto itself. Contact us to work with attorneys who know that complicated area of the law and have helped people successfully meet its challenges. Click here to schedule a complimentary Estate Planning Discovery Session with us when you are ready to take the next step. We will be here to help you "protect who and what you love, including yourself."

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The information in this blog is for educational purposes only and should not be considered legal advice.


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