In order to qualify for MassHealth, a nursing home resident can have only a limited number of assets. Careful planning can allow the resident’s spouse to maintain some assets. However, if that community spouse passes away first and leaves those assets to the nursing home resident, the resident suddenly would be over MassHealth’s asset limit.
While the community spouse could write a will that disinherits the MassHealth resident, most states including Massachusetts have laws that allow spouses to claim a portion of their deceased spouse’s estate regardless of what the will says. This is called the elective or statutory share. The amount the spouse can claim varies from state to state.
A spouse can disclaim his or her elective share, but if a MassHealth recipient disclaims the inheritance or fails to take their statutory share, it is considered an uncompensated transfer of assets and the recipient may receive a period of MassHealth ineligibility. To avoid this, the community spouse will most likely need a will that addresses this issue. One option is for the community spouse to create a will that leaves the nursing home spouse a limited interest in trust considered to be worth more than the elective share.
A will may only address a limited amount of the community spouse’s assets, thus care and attention should be paid to the beneficiary designations on life insurance, retirement accounts, and other assets. Lastly, a community spouse might not be the only person a nursing home resident could inherit assets from. Other family members, even adult children who do not have children of their own, should review and possibly modify their estate plans to ensure assets are not directed to the nursing home resident.
Every situation is different and thus all options should be explored with an attorney.