For most people, receiving an inheritance is something good, but for a nursing home resident on Medicaid, or those who rely on Medicaid as their primary form of insurance, an inheritance may not be such welcome news. Medicaid has strict income and resource limits, so an inheritance can make a Medicaid recipient ineligible for Medicaid. Careful planning is necessary to make sure the inheritance does not have a negative impact.
There are strategies that can be used to protect some of the inheritance. You may be able to transfer the inheritance to an irrevocable trust, depending on the type of Medicaid received. You may be able to transfer to your child with special needs, or the child’s special needs trust. You may also pre-pay an irrevocable funeral contract or buy burial items for a close relative. It could also be spent on travel, dining out, clothes, television, DVD player, and paying off any debts you may have. To be sure, you will need to consult with an elder law attorney who has experience with the various types of Medicaid.