My aunt died recently and left 33k to my mother as a beneficiary of her pension. We are just starting to settle her estate, but my mom is also going to receive 1/3 of the full estate after probate. This could be anywhere from 50k to 100k. My mom is on SSDI and receives both Medicare and Medicaid. She gets very expensive chemotherapy treatments monthly and we can't risk her treatments being suspended if she is disqualified from Medicaid. I have looked into Special Needs Trusts, Spend-Down options, and some annuities, but I'm overwhelmed. She is extremely poor and we have been trying to get her into subsidized housing for years. We are thinking of spending the 33k on a downpayment for a small house/condo if we are forced to spend it down, but she has sub-par credit and I'm not sure if she can be approved in time. How can we set things up so that she can make the most out of the pension and be prepared for the later estate payout? Special Needs Trusts don't allow you to spend the money on rent/mortages/utilites etc, which is what she needs help paying the most. Is there another kind of trust or annuity that would let her use the money on these things without disqualifying her for Medicaid? If not, what is the best option to maximize her use of this money? I have already set up some consultations with elder law attorneys but they are booked until the middle of next month. I'm not sure what to ask for yet, hopefully someone can point me in the right direction!
If an attorney is handling your aunt's estate, and your mom hires the elder law attorney, the elder law attorney can give directions on the best way to distribute the estate assets for the benefit of your mother.
If there is no attorney handing your aunt's estate, consider recommending that the family hire a probate - estate settlement attorney.
There's no need to spend the inheritance down to zero, if you get proper advice and guidance from an attorney who knows how to comply with the Medicaid rules in your state.
And for other people reading this column, the way to avoid confusion in future cases would be for Aunt to establish a Testamentary or Supplemental Needs Trust for the benefit of her sister (your mother). Since the Trust assets would be contributed by Aunt, there's no effect on the Trust beneficiary's Medicaid eligibility when Aunt passes and leaves her funds to the Trust, as long at the document is written properly.
There’s a lot of unknowns in your situation. Getting answers and setting up just what to do with the $$ can take time. Please read & reread GardenArtis posts as there lots of detailed info there.
Problem is if she is on Medicaid it is a very tight “at need” program. The month she gets the $ it is income for that month and then an asset every month afterwards. Unless there’s a plan in place for $ & legal to fold into, she’s gonna be ineligible in some way. If executor can wait without an issue, see if they will do this for you. I’ve been a executor 3 times and you do have a lot of discretion as to what’s what if your the independent administrator type of executor. Doesn’t hurt to ask.
Also I agree with Garden that she likely is going to be ineligible in some way for Medicaid. But I’d bet she can do a combo of SNT and a couple of Medicaid compliant annuity to increase her income (to cover housing). It has to be Medicaid compliant and these are speciality insurance underwriting and have to be actuarial correct. The usual annuity that guys with insurance licenses sell by & large will NOT be Medicaid compliant - there’s a lot of fuzzy selling on annuities imo. Maybe a dz underwriters who do the truly Medicaid compliance ones. A good NAELA or disability atty will know who to go to on this. They are not DIY.
Another aspect to explore is what does the 1/3 of the estate constitute? Investments? If so, and if they're stocks or mutual, for example, your mother could hold them as investments w/o drawing down on them. If any are IRAs, and your mother is over 70.5 years of age, she'd have to take RMDs (Required Minimum Distributions) on an annual basis.
You might start now by trying to get an inventory of the assets your mother would inherit, before you meet with an attorney. As stated above, the type of investment would be something you'd probably want to discuss, to determine the payout options as well as the potential income and the effect of both on Medicaid.
In fact, it wouldn't hurt to ask the Personal Representative (formerly called the Executor/trix) of Estate) for a list of inherited items so you'll have it for the meeting with the attorney. I think that's the starting point inventory and have the attorney help with the assessment of the assets.
The second aspect would be how to maximize the assets while also addressing Medicaid. But I suspect with that kind of liquid inheritance, Medicaid is going to be out of the picture when the transfer and retitling of assets takes place.
I would also ask to speak with a social worker or biller in the offices of the oncologist and infusion center where she gets chemo to determine whether Medicare will pay for the chemo treatments if Medicaid pulls out.
I'm sorry for the loss of your aunt, and for the challenges your family is facing, and hope that you can get the information you need to prepare for the meeting with the new attorney.
Good luck!