A Simple Estate Matter? Not so Fast (Part 2)

             Last week I was telling you about Mark’s call regarding the administration of his sister, Melanie’s estate.   He had gone to the Surrogate to get appointed as administrator of the estate but had listed only 4 of 5 siblings as heirs, thinking his brother, Frank should not be listed because he “can’t” receive a share.  What he really meant was that he can’t receive that share without losing his government benefits, including Medicaid.

            However, I explained to Mark that legally Frank was entitled to a share because Melanie didn’t leave a will. Intestacy laws establish that because she wasn’t married, didn’t have children and both her parents had already died, the next in line to receive her estate are her siblings.

             Mark was correct that Frank’s receipt of his share would jeopardize his benefits and could result in his losing his housing in a group home he has been living in all his adult life. I told Mark what we need to do is establish a special needs trust #SpecialNeedsTrust for Frank’s benefit.  His share of the estate could be placed in that trust as long as he is disabled and under age 65 (he is).  The trust can only be for the benefit of Frank and no one else.

             I also explained to Mark that we would need a judge to sign a court order directing the establishment of the trust.  This would be the only way that Frank can keep the inheritance and his government benefits.

            “What if he chooses not to receive the benefits,” Mark asked me.  I told him that by disclaiming (refusing to accept it) his share it would be no different than receiving the money and then giving it away.  That would be a transfer of assets and subject to a Medicaid penalty which would, again, cause him to lose benefits.

            The cost to petition the court to set up the trust would come from Frank’s share.  “It’s the best way to go”, I explained to Mark, “that will cause no interruption in benefits.”  Mark was grateful that he was referred to me before he made a mistake and we immediately started working on accomplishing the task at hand.