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In a community property state, (WI), can one spouse change ownership of life insurance policies during the Medicaid look-back period in order for the insurance to be retained and not counted as an asset? The money will be needed to help pay monthly expenses when my husband passes. Without it, I would have to file for bankruptcy.

We always read that we should consult an elder law specialist. I have paid 2 and consulted a 3rd for advice. All had very good credentials. Yet I remain confused. One told me she didn’t know – the elder laws change so fast; it’s hard to keep up with the changes! The 2nd told me that my husband could not change ownership legally, that the policies would have to be sold. He said we’d have to sell all but $2000 of the policies, even mine, as they are all considered community property. This included 2 policies that were taken out at my birth and given to me by my parents long before the marriage. This made me question this particular attorney. Then he said it didn’t matter who owned the policy, if it was a policy for a Medicaid recipient, it was considered the recipient’s asset and needed to be sold. The 3rd was more interested in getting me to purchase his “package” of documents which contained the “key” to clarification despite the fact that we already have wills and POAs for finance and health.

It had been suggested that we place my husband in a nursing home as soon as possible. This had me frantically calling insurance companies during the Christmas holidays with their shortened hours and vacations. I felt I should cash some policies in during that current year and the rest after the 1st of the new year in order to spread the ultimate financial burden between 2 years.

Ultimately we did not have enough time to complete anything before the end of the year, and my husband did not have to enter a nursing home yet. We are now trying to look at this more carefully before rushing to sell.

Even though we didn’t have to start the look-back process, we realize any decision we make now will affect the next 5 years. I’m tired of paying for advice and still being confused. I feel like this is one of the last things I want/need in place, but don’t really know what to do. I know this is all very complicated, hence the advice to consult an attorney, but, if anyone has info or experience that would clarify any of this, it would be greatly appreciated.

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Addressing only one comment....the attorney who apparently felt that elder laws changed so fast it's hard to keep either needs a refresher course on legal standards practices or should not be practicing law if she has that much difficulty keeping up. It's de rigeur for attorneys to keep up to date on changing laws as well as case law that affect existing statutes.

In some of the firms I worked for, Advance Sheets were circulated to specific departments, to partners, associates and paralegals. The latter weren't expected to understand all the ramifications of the cases, since we hadn't gone to law school, but we were expected to be proactive in keeping aware of changes in laws that affected our practice areas.

I can't speak to the specific issues of community assets or the advisability of transferring a policy to retain funds for funeral expenses. It's outside of my knowledge sphere, but I can certainly understand the dilemma the issue poses.
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This would vary by state. I'm shocked an elder law attorney told you she didn't know the answer...this is her job, to know this answer!

I can tell you that generally, if a life insurance policy has a cash value, then it is an asset and is not exempt. If the life insurance policy is a term life insurance policy, it has no cash value, therefore it is not an asset and is exempt from the get go.

If your policy has a cash value, and you change the ownership of the policy, it would be considered a gift and would trigger a penalty period.

I assume, since you say "sell all but $2000" that your policies have cash value. It would be a bad idea to change the ownership on anything with a cash value.

Angel
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