Estate Planning and the Medicare “Spend Down”.

Medicaid Spend Down

A common misconception is that the State of Oklahoma will take a person’s property if that person goes into a nursing home. While it is true that Medicaid will not pay for the long term (nursing home) care of a person with assets, the State does not actually take anything. Instead, a person with non-exempt assets ofer $2,000.00 will be required to pay for his/her long term care from their own assets until they have assets below the maximum allowed. This is called “spending down” one’s assets. While certain assets are “exempt” (not counted in the value of one’s property), for the most part, all personal assets must be depleted before Medicaid will pay for long term care. If the person going into long term care is married, and the spouse is not also in long term care, the spouse can keep the home, one car and the household furnishings, as well as certain other property as exempt, or “non-countable” assets.

Many times, you will see an ad for a free seminar promising to show you how to protect your assets from the State if you go into long term care. The truth is that many people do not have adequate resources to engage in the type of planning that avoids the “spend down” requirements. The seminars are free, but the goods being sold are not.

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Oklahoma Court of Appeals Reiterates Surviving Spouse Rights

The Oklahoma Court of Civil Appeals has reiterated certain rights of surviving spouses in Probate proceedings. Surviving Spouses have always been granted special protections by our statutes.

The case involved a husband that, before he got married, transferred property into a revocable trust. Part of the property was a piece of real property referred to as “the farm”. After husband and wife married, husband, as Trustee, conveyed the farm to one of his daughters. Three statutory provisions become relevant here:

  1. When a married person conveys real property in Oklahoma, the spouse must sign the deed;
  2. When a married person dies without a Will in Oklahoma, the surviving spouse is entitled to a “forced share” that is no less than an undivided 1/2 interest in the property acquired by the joint industry of the parties;
  3. ¬†During the administration of an estate, a surviving spouse is entitled to an “allowance”¬† against his/her share until the property is distributed.

Surviving Spouse first argues that the farm should be considered part of the estate because property in a revocable trust is considered to be part of the decedent’s estate. The Appeals Court ruled against her, because the “forced share” statute only allows the spouse to take half of what the parties acquired jointly as a couple. Since the house belonged to the husband’s trust prior to the marriage, it was never part of the estate that wife could claim.

Wife next argued that the conveyance was invalid, because she never joined in the deed. The Court essentially said that the wife’s claim is moot, because even if she prevails, the result will be that the land will again be the property of the trust, and it will have no effect on the Probate proceedings. Wife argued that if the property was recovered into the trust, it would be available to pay her allowance. The Court disagreed, pointing out that a surviving spouse can draw allowance only against that part of the estate that he/she will eventually receive.

Finally, wife argues that she should have the homestead right of a surviving spouse in the farm. It was undisputed that, at the time of husband’s death, the couple lived at the farm. Oklahoma allows the surviving spouse to live in the homestead for the remainder of his/her life so long as the right is not waived or abandoned. Here the Court held that the issue of title does not matter as to homestead. Even though the farm may be titled in the Trust, or even in the decedent’s daughter, the wife had the rights of homestead. The matter was sent back to the Trial Court for a determination as to whether wife had abandoned or waived her homestead rights.


Read the Decision here.

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