How Mom’s Estate Plan Did More Harm than Good

Sue called concerning her brother, John, who is 65 and disabled.  “He has cerebral palsy”, she told me,  “and he is wheelchair bound.  He lives in senior housing and needs aides to assist him.  Someone told me he is eligible for Medicaid because he has nothing other than his Social Security income of $1900 a month.”  It sounded like it could be a good fit.

I explained to Sue that New Jersey has a Medicaid program that can cover the cost of home aides that could help John with activities such as getting dressed, bathing and going to the bathroom. Typically, this program will cover 40 to 50 hours per week.

I then went over the financials again with her.  “Is there any other source of income besides Social Security or any asset besides John’s checking account into which the Social Security is deposited”, I asked.  That’s when Sue told me about the trust that her mom had set up for John in her will.

Sue told me that John had been disabled his entire life and had never acquired any amount of money.  “John didn’t get along with the family”, she told me.  “Mom left him a little bit of money but she put it into a trust”.  Sue estimated the amount of money John received to be about $750 per month.

Once she told me that, I knew the trust could be a problem in qualifying John for Medicaid.  What seemed to be a straightforward case now was getting complicated.  I told Sue that I’d need to see her mom’s will so I could review the terms of the trust and how it works.  Sue immediately became concerned.  I told her that we shouldn’t jump to any conclusions until I see the trust.

Next week I’ll tell you what I found.