LIfe Insurance Ownership

Mom has a 10k life insurance policy and the CSV is $2100.00. Mom is already Medicaid eligible. Ownership to life insurance was transferred to daughter and assigned to a funeral home at the same time to make this not a Medicaid asset of mom. All paperwork incl. the transfer paperwork and irrevocable/preneed funeral contract was submitted to the Caseworker immediately @ Medicaid recertification. Mom was still approved. This was no longer listed as an asset to mom. Caseworker never questioned and surprisingly, I thought they will do to transfer. In State of NJ, there is a funeral exclusion law for Medicaid recipients when spending down assets.

Due to above and if we want to really audit it, will there be a penalty for transfer or gifting imposed later?

What is to worst that can happen after mom passes?

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Jan 29, 2015
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Life Insurance Issues
by: Gabriel Heiser

I don’t understand why it was first transferred to the daughter, before the funeral home. If it went to the daughter, it would be a gift to her. However, since the caseworker approved the application, I suppose that that was not an issue.

If there was an understanding that daughter would transfer the policy to the funeral home—and indeed it was—then if it ever comes up that it was a gift transfer to daughter, it could be argued that it was a constructive trust and always meant to go to the funeral home, where it would be exempt.

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--by Beth Heikkinen
Marquette, Michigan

I just want to thank you for this site. It answered my questions. I think many people that do research on the net take it for granted and when they find what they are looking for they forget "someone put time, money, etc into providing me with this information."

Thank you!

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