Greg James* was diagnosed with a condition requiring long-term nursing home care. To qualify for Medicaid, Mr. James needed to reduce his assets to below $2,000.
Mrs. James had around $150,000 in her name, all of which she wanted to leave to her husband in her will. However, should Mrs. James die before her husband, that windfall would disqualify Mr. James from Medicaid benefits eligibility and create a long road to spending down to requalify.
On the other hand, leaving Mr. James out of the will entirely would also backfire under the elective share law, which bars a spouse from being disinherited. In New Jersey, the elective share law mandates that a surviving spouse is entitled to about a third of a deceased spouse’s estate.
What should the James family do to not risk Mr. James being disqualified from the benefits he had worked so hard to obtain?
When Medicaid and the Elective Share Collide
Under the elective share law (including in New Jersey and Pennsylvania), a spouse cannot be disinherited by simply omitting them from a will. In New Jersey, the elective share typically entitles a surviving spouse to approximately one-third of the deceased spouse’s estate, regardless of what the will says — unless there’s a valid prenuptial or postnuptial agreement waiving that right.
This rule becomes especially important in Medicaid planning, which is exactly where the James family found themselves.
In these situations, the best approach is for the healthy spouse (here, Mrs. James) to leave the surviving spouse only the minimum required under the elective share law. The remaining could then be left to the children or other beneficiaries.
With this approach Mr. James would still have some spending down to do, but it will take less time and effort with a third of the estate instead of the entirety of it.
If you or a loved one are planning for long-term care, make sure your estate plan supports — not sabotages — your Medicaid strategy. The laws are complex, but with guidance from experienced and knowledgeable attorneys like those at TREEL, you can protect your family, your assets and your peace of mind. Call us today.
*Names and some details have been changed to protect the client’s privacy.
