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Elective Share Continued Reprinted October 1999 Since the June newsletter, Ray has had a considerable number of questions regarding the new elective share with the augmented estate. First of all this law applies only to married couples, it does not apply to single persons. Under the old law, only the assets passing under the deceased spouse’s will were subject to the right of election. Under the new law, everything that the deceased spouse owns (the augmented estate) is now subject to calculating the elective share. Under the new elective share law, a surviving spouse is entitled to 30% of the deceased spouse’s augmented estate. Not only does this new law create complications in valuing the elective share when a spouse dies, it creates even more problems when someone is applying for or receiving Medicaid benefits for nursing home care. This assumes that something less than the entire decedent’s augmented estate is left to the surviving spouse. If 100% of the augmented estate is given to the surviving spouse, there is no elective share problem. With regard to Medicaid, the problem will occur if the community spouse dies first and the institutionalized spouse survives. Under the Medicaid rules, a Medicaid applicant or recipient cannot refuse or waive the right to any inheritance. If this is done, such refusal or waiver can constitute an uncompensated transfer of an asset which could cause a period of ineligibility and loss of Medicaid benefits. Under the new law, the community spouse can establish a qualifying special needs trust to avoid this problem. However, this trust must also comply with Federal law in order to meet Medicaid requirements. The problem is how much asset value is to be placed in this qualifying special needs trust. In order to calculate the amount going into this trust, the value of the entire augmented estate must be considered. If not properly done, the surviving spouse on Medicaid can be required to elect against the deceased community spouse’s estate which can then result in the loss of benefits having assets over $2000. This law affects all married couples when a spouse dies on or after October 1, 2001. As you can see, this can become a complicated issue and should be discussed thoroughly with the an attorney well versed in this area of the law.
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Copyright © 2002 Law Firm of Raymond L. Parri, P.A., All rights reserved.
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