When one spouse is in a nursing home and applying for Medicaid, planning has to take into account the possibility that the spouse who is not in the nursing home (called the "community spouse") may pass away first. This is because the community spouse's death may make the spouse in the nursing home ineligible for Medicaid.
In order to qualify for Medicaid, a nursing home resident can have only a limited number of assets. Careful planning can allow the resident's spouse to maintain some assets. However, if that community spouse passes away first and leaves those assets to the nursing home resident, the resident suddenly would be over Medicaid's asset limit.
While the community spouse can write a will that disinherits the Medicaid resident, most states have laws that allow spouses to claim a portion of their deceased spouse's estate regardless of what the will says. This is called the elective or statutory share. The amount the spouse can claim varies from state to state.
A spouse can disclaim his or her elective share, but if a Medicaid recipient disclaims his/her elective share, it is considered an uncompensated transfer of resources and the recipient will likely receive a period of Medicaid ineligibility. To avoid this outcome, the community spouse will most likely need a will that addresses this issue. To learn more about possible, viable options (such as creating a will that includes a testamentary special needs trust) and to help determine the best course of action for you and your spouse, community spouse's are strongly encouraged to consult with their attorney.