A component of the new state budget that cleared the state legislature back in June could have a substantial impact on the way some Wisconsin residents go about planning their estates. That’s because, under the new budget, the state has broader authority to recover assets paid out to Medicaid recipients after they die, the Wausau Daily Herald reports. Some observers speculate that the new law may even impact how seniors approach decisions as fundamental as marriage.
Medicaid is a collaboration between the federal government and the states. Federal law requires the states to create a system for recouping some of the money paid out to Medicaid recipients after they die. In the past, Wisconsin law called for the government only to pursue those assets subject to probate. That meant that, if you created a revocable living trust and fully funded it with your probatable assets, you could not only protect your family from probate, but Medicaid estate recovery, as well.
The new budget law changes that. It gives the state the green light to pursue assets whether they are in a Medicaid recipient’s probate estate, or in trusts the recipient created. The new law also requires that, if a living trust’s creator received Medicaid benefits, then the successor trustee must inform the state government’s estate recovery unit in writing of the trustor’s death within 30 days. Additionally, if the state timely files a claim with the trust for repayment of Medicaid benefits, the trustee must pay the claim within 90 days. The law establishes similar 30-day and 90-day deadlines for special needs trusts.
Our clients will not be surprised at this news, because we have always counseled them that a revocable living trust is not a way (in itself) to protect assets from Medicaid spend-down or recovery.
The state contends the changes were necessary in the interest of fairness to all recipients and taxpayers. Department of Health Services spokeswoman Claire Smith indicated to the Daily Herald in an email that, “It is not fair to have friends and neighbors pay taxes to finance all of a person’s long-term care needs so that an inheritance can be left to others.” Others, however, contend that the new rules will simply force seniors into more desperate planning measures. “In the future, I’m going to have to say there is some danger and you may want to rethink whether it’s a good idea to get married at all,” Peter Grosskopf, a former chair of the Wisconsin State Bar’s elder law board, told the Daily Herald.
The situation, though, need not necessarily be so dire. A number of planning techniques potentially exist to help individuals or couples who think they might need Medicaid assistance in the future. Certain assets do not count against you for purposes of Medicaid qualification. With proper estate planning, including long-term care insurance, you can avoid or mitigate the potential impact of a Medicaid estate recovery claim. To learn about your options, contact Madison estate planning attorney Daniel J. Krause of Krause Law Offices LLC. He has years of experience to assist you and your family to ensure you receive a well-crafted, customized estate plan to meet your needs and accomplish your goals.
Contact us through our website or call our office at (608) 268-5751 to schedule your confidential, no obligation initial consultation.
Many Wisconsin Estate Plans Can Benefit from Using Both a Will and a Trust, Wisconsin Probate & Estate Planning Blog, April 25, 2013
Using Trusts to Continue to Provide for Your Loved Ones, Even After You’re Gone, Wisconsin Probate & Estate Planning Blog, March 25, 2013
Your Wisconsin Trust May Need a Trust Protector, Wisconsin Probate & Estate Planning Blog, Oct. 31, 2012
Photo credit: Kevin Halstead at Wikimedia Commons.