The Problem of the Do it Yourself Will (Part 2)

Last week we were discussing Mary’s call to me about her Uncle Joe’s unsuccessful attempt to execute a will he obtained on the internet.  The will was not admitted to probate and Joe had no previous will.  So what happens in that case?

Without a will Uncle Joe’s estate passes according to New Jersey intestacy laws, the set of laws that provides for the distribution of assets when one dies without a will.  First to inherit would be Joe’s spouse and children, then his parents, then his siblings and then his siblings’ children.

Joe had no wife or children and his parents died many years ago.  That left Joe’s brother – Mary’s father, Jim.  And that’s where the problem lay.  Jim is a Medicaid recipient and would lose those benefits because he would have $50,000, more than the $2000 Medicaid asset limit.

Mary was hoping I had a solution.  She told me that her uncle really wanted Mary and her brother, Jim, Jr. to inherit the money.  She also didn’t want anything to interrupt Dad’s benefits.  After all, $50,000 would not be enough to really help Dad who is now in a nursing home.

I told Mary there was a solution, but I knew she wouldn’t be thrilled with it.  If her dad gives the entire inheritance to Medicaid he can continue to receive benefits uninterrupted.  Or, he could come off of Medicaid, spend down those assets and then reapply.  Those were her two choices.  Dad could not give the money to Mary and Jim, Jr. because that would trigger a Medicaid penalty, making Dad ineligible for benefits.

We could preserve Medicaid but we can’t also get the $50,000 to Mary and Jim, Jr.  That could only have been done if Uncle Joe had gone to an attorney to have his will drafted and executed properly.  It was a case of Joe being penny wise and pound foolish.  And in this case it the family $50,000.