Is Disclaimer Effective for Medicaid Purposes?

by K. Gabriel Heiser
(Author, Medicaid Secrets)

Question:


90 yr old Mom has been on Medicaid in nursing home for 3 yrs. She was beneficiary of trust which she disclaimed through comprehensive POA which allows for gifting to family members for Medicaid planning. How can we keep her qualified for Medicaid? I have the Medicaid Secrets book.

Answer:

When a person “disclaims” a gift, it is treated as if they never received it, under state law. However, the Medicaid rules do not follow this, and the Medicaid rules ignore the disclaimer, treating the disclaimed asset as if it were received by the person disclaiming it, and then gifted by that same person to the persons who actually do receive the asset under the state disclaimer law. Thus, if your mother disclaimed the interest in the trust recently, this must be reported to the Medicaid department in your state, and she will be hit with a penalty period equal to a certain number of months (number of months = the value of the trust interest she disclaimed divided by the average state nursing home cost).

Without knowing more about the terms of the trust and your state law, it is impossible for me to give you any suggestions of what to do next. Clearly this is a complex situation and you are well-advised to seek the advice of an experienced elder law planner in your state who routinely deals with Medicaid issues.

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Mar 21, 2012
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Follow-up question and reply
by: CC

Question:

Mother is in nursing home in NC. Her brother lived in Florida. The trust terms state my mother as beneficiary and then her children if she is deceased. Everything is being handled through the Florida courts. The Disclaimer statement was approved by court in Fl. It has not been registered yet. Would it be better to null the Disclaimer and then as POA I could make gifts to her children?

Answer:

The disclaimer laws of each state differ from each other quite a bit. Further, I have not seen the terms of the trust. Finally, I don’t know the mental condition of your mother nor the financial and family situation of all persons who may be affected by this. Thus it would be impossible for me to assist you with a worthwhile and accurate statement of what you can or should do.

Accordingly, I strongly suggest that you sit down with an elder law attorney for some specific advice before too much more time passes. Be sure they do a lot of Medicaid planning, because not all elder law attorneys do. Best of luck with everything!

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Marquette, Michigan
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