If Dad dies first can the will be changed, or does it go to Mom and get spent down?
My Mom was placed in a Care Center in Minnesota in April 2008 with dementia and some physical issues. At the time I submitted the financial assistance request and split their assets in half. Dad still lives in a church parsonage. They had only cash assets - do not own a house and had an old car. It took a little more than a year to spend down Mom's half of the assets before Medicaid began to pay the expenses, except for the majority of her Social Security check. Their will currently has Mom as the first beneficiary. If Dad dies first, can the will be changed to give his half of the assets to us three children, or does it go to Mom and then have to get spent down again?
Expert Answer
You can lawfully move your father's remaining half of the family's assets out of Medicaid's reach in one of several ways. First, any assets your father spends before he dies would no longer be part of his estate and therefore would not pass to your mother if your father dies first. Also, as long as he is mentally competent to do so, he could give his assets to you and the other heirs before he dies; although there are Medicaid restrictions on your mother giving away assets -- as you no doubt learned during her spend-down period -- there are no restrictions on what your father does with his separate half of the assets.
With regard to the current will, you are right to be concerned. As you describe the will, if your father dies first, all his assets go to your mother. Those assets might then disqualify her from Medicaid coverage of the nursing home until she spent down the assets to the Medicaid limit. A way to avoid that, without your father having to spend or give away the money during his lifetime, is to change his will making the three children the beneficiaries instead of your mother. (Your father needs to be legally -- meaning mentally -- competent to make such a change in his will.) One possible roadblock to this strategy might be Minnesota probate (estate) law if it does not consider the assets to be separate property even though Medicaid does recognize the assets as separate. For that reason, you should consult with a Minnesota lawyer who does wills and estate work. He or she can help you change the will for your father, if doing so would keep the assets from going to your mother if your father dies before she does.
Because your father's assets are just cash, you might also discuss with the lawyer other legal devices, such as a simple pay-on-death bank or investment account, which would also protect the money -- if Minnesota law allows your mother to be bypassed -- by making you and your siblings the beneficiaries, and would also avoid the probate process when your father dies. On the other hand, whether it's worth taking these steps depends on whether your father's assets are great enough that they would have to go through probate when he dies. In some states, assets under a certain limit may pass to beneficiaries named in a will without the will having to go through probate.