Provides advice on avoiding probate in the State of Kansas.

1. ESTATE PLANNING BASICS
DO IT YOUR WAY!
… and keep it simple
An assortment of brief articles about topics outlining simple estate planning
steps that are inexpensive and easy to implement.
Compiled by Paul Shipp, the Managing Attorney
of Kansas Legal Services – Manhattan
For help call 800-723-6953

2. TABLE OF CONTENTS
THE IMPORTANCE OF PLANNING .............................................................................. 4
LAWYER HUMOR............................................................................................................ 4
THE DURABLE POWER OF ATTORNEY ..................................................................... 4
A SAD STORY .............................................................................................................. 5
HOW IS A POWER OF ATTORNEY EXECUTED?................................................... 5
OTHER TYPES OF POWERS OF ATTORNEY.......................................................... 5
SOMETIMES A POWER OF ATTORNEY IS NOT APPROPRIATE........................ 6
WHAT IS PROBATE AND HOW DO I AVOID IT?....................................................... 6
THE DEFINITION OF PROBATE................................................................................ 6
THE MYTH OF A WILL............................................................................................... 7
SHOULDN’T I JUST GET A TRUST?......................................................................... 7
GOOD PLANNING IS KEY.......................................................................................... 7
CHECK THE NAMES OF ALL BENEFICIARIES...................................................... 8
PROPERTY WITH A CERTIFICATE OF TITLE........................................................ 8
CASH AND BANK ACCOUNTS ................................................................................. 8
GIFTS ............................................................................................................................. 8
CONCLUSION............................................................................................................... 8
MORE ESTATE PLANNING HUMOR............................................................................ 9
PRESERVING YOUR WILL............................................................................................. 9
DO NOT LOSE THE WILL........................................................................................... 9
DO NOT CIRCULATE YOUR WILL........................................................................... 9
TELL YOUR EXECUTOR YOU NAMED HIM/HER............................................... 10
UPDATE YOUR WILL ............................................................................................... 10
TRANSFER ON DEATH DEEDS................................................................................... 10
WHAT IS A TRANSFER ON DEATH DEED?.......................................................... 11
ONCE THE TRANSFER ON DEATH DEED IS FILED MAY I CHANGE MY
MIND?.......................................................................................................................... 11
WHAT IF I SELL MY HOUSE BEFORE MY DEATH? ........................................... 11

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WILL THIS COUNT AS A TRANSFER OF ASSETS AND CREATE A PROBLEM
FOR MEDICAID ELIGIBILITY? ............................................................................... 11
I HAVE A MORTGAGE ON MY HOME. MAY I STILL USE A TRANSFER ON
DEATH DEED? ........................................................................................................... 11
AFTER MY DEATH, WHAT NEEDS TO BE DONE?.............................................. 12
MY HOME IS IN JOINT TENANCY WITH MY SPOUSE. WE WOULD LIKE TO
LEAVE OUR HOME TO OUR CHILDREN, AFTER OUR DEATH. CAN THIS BE
DONE WITH A TRANSFER ON DEATH DEED?.................................................... 12
DOES THIS AVOID TAX CONSIDERATIONS?...................................................... 12
HOW CAN I GET A TRANSFER ON DEATH DEED? ............................................ 12
ELIGIBILITY FOR MEDICAID ..................................................................................... 12
WHO QUALIFIES? ..................................................................................................... 13
SO HOW DOES UNCLE SAM DEFINE “POOR?”................................................... 13
WHAT IF I AM MARRIED? DO BOTH OF US HAVE TO BE POOR?.................. 14
THE WELL SPOUSE CAN KEEP A GOOD AMOUNT OF COLD HARD CASH &
INCOME! ..................................................................................................................... 14
SPENDING DOWN ..................................................................................................... 15
HOW DOES THE SICK SPOUSE SET THE WELL SPOUSE UP?.......................... 15
I HAVE MORE QUESTIONS, WHAT DO I DO?...................................................... 16

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THE IMPORTANCE OF PLANNING
Nobody likes to think about estate planning, except maybe estate lawyers. Estate
planning can be morbid and boring, and you probably already have a long enough
to-do list at your age; the gutters are full of leaves, the front door is broken, the grass
needs mowed, the car needs to be fixed, and the list goes on and on. Most think they
have no time to think about a power of attorney, a living will, a last will & testament
or anything like that.
We like to think we are invincible, but if the worst should happen (you die) and your
affairs are not in order, you will leave your loved ones a big headache, and possibly
a financial burden. Your loved ones will not necessarily be worried about gutters,
mowing the grass or fixing your car, but they will be forced to make crucial
decisions about your estate at an emotionally difficult time, and may have no idea
if what they are doing is what you had in mind.
When family members disagree about what you would have done is when the real
fights begin. If you planned and have the right documents and decisions made
beforehand, you will save those you leave behind energy, and you will have made
your own decisions. Take care of the basics in advance and this will ensure that your
money stays in the family and not in the hands of your least-favorite uncle, Sam.
LAWYER HUMOR
During a law school lecture the professor posed the following hypothetical during
one of his lectures on estate planning.
“A wealthy man dies and leaves ten million dollars. One-sixth is to go to his wife,
one-fifth is to go to his son, one-fourth to his mistress, and the rest to charity. Now,
what does each get?"
After a very long silence in the lecture hall one of the over achievers raises his hand,
and with utter sincerity in his voice "A lawyer!"
THE DURABLE POWER OF ATTORNEY
For most, the durable power of attorney is the most important (and cheapest) estate-
planning instrument available. A durable power of attorney is an instrument that is
effective upon the incapacity of its maker. Sometimes a durable power of attorney
can be even more useful than a will. A power of attorney allows a person to make

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decisions for you and to act for you as your "attorney-in-fact"; if designated your
"attorney-in-fact" can even act in your place for financial purposes when and if you
ever become incapacitated. An attorney-in-fact is the person you name to make
decisions for you when you are incapacitated. The attorney-in-fact is a legal term of
art and does not have to be a person who is an attorney. Your attorney-in-fact will
be either a family member or a close friend you can trust to make decisions for you.
Many question why they would want someone to be able to make decisions for
them, especially financial decisions, like refinancing or selling a home.
A SAD STORY
I once dealt with a situation where a husband wanted to refinance his home to take
advantage of better interest rates before they go up, but when it came time to actually
close on the refinancing agreement his wife was unable to sign off because she was
incapacitated by a debilitating stroke. The fact is we never know what hand life will
deal us. As a result of his wife being incapacitated he was not able to finalize the
closing and he was not be able to take advantage of the better interest rate because
she did not have a power of attorney to act on behalf of his wife. Because a Power
of Attorney was never created she cannot execute one now; it’s too late, because
she is incapacitated.
HOW IS A POWER OF ATTORNEY EXECUTED?
The law requires that a durable power of attorney (or any power of attorney) be
executed before the person is incapacitated. If a durable power of attorney is not
executed before incapacity occurs then the person will not be able to legally create
a power of attorney and then no one can act for that person unless a court appoints
a conservator or guardian. Creating a guardian & conservatorship is a court process
that takes time, costs money, and sometimes the judge may not choose the person
you would prefer to make decisions for you. In addition, under a guardianship or
conservatorship, your representative may have to seek court permission to take
planning steps that he/she could implement immediately under a simple durable
power of attorney.
OTHER TYPES OF POWERS OF ATTORNEY
A power of attorney does not have to be durable (go into effect upon incapacity) but
may be limited or general and go into effect immediately. A limited power of
attorney may give someone the right to sign a deed to property on a day when you
are out of town. Or it may allow someone to sign checks for you. A general power
is comprehensive and gives your attorney-in-fact all the powers and rights that you
have yourself. What type of power of attorney you need should be discussed with a
competent attorney and a decision as to how to proceed should be made by you with

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the advice of an attorney. The long and short of is that the power of attorney can
avoid costly court procedures and prevent wasted time.
A power of attorney may also be either current or "springing." Many powers of
attorney take effect immediately upon their execution, even if the understanding is
that they will not be used until and unless the grantor becomes incapacitated.
However, the document can also be written so that it does not become effective until
incapacity occurs (that’s a durable power of attorney). In such cases, it is vitally
important that the standard for determining incapacity and the triggering event
making the power of attorney effective be clearly laid out in the document itself.
SOMETIMES A POWER OF ATTORNEY IS NOT APPROPRIATE
While you should seriously consider executing a durable power of attorney, if you
do not have someone you trust to appoint then it may be more appropriate to not
have one. If you do not a power of attorney then your friends and/or family will
have to go to Court and any decision that is made will be done with the probate court
looking over the shoulder of the person who is handling your affairs. In other words,
you may not be able to trust someone to make those decisions for you and in that
event you should let the Court oversee the situation.
WHAT IS PROBATE AND HOW DO I AVOID IT?
THE DEFINITION OF PROBATE
Many do not realize that "Probate" is actually a verb, meaning it is something we
"do" and not somewhere we go, or something we have. Probate can be used as an
adjective describing a place or a thing, for example, a probate court or probate
property. Originally "Probate" referred to a court procedure by which a will (Last
Will and Testament) was/is proved to be either valid or invalid. The actual
procedure of "Probate" is accomplished by a probate court. The probate court's job
is to probate, "probate property." Generally, the probate process involves collecting
a deceased person's probate property, liquidating liabilities, paying taxes and
distributing probate property to heirs. Sometimes the probate court has a will (Last
Will and Testament) to probate, and sometimes the probate court is left to its own
devices to figure what to do with the deceased's probate property. So, what is
probate property, anyway?
Just to put it bluntly, probate property is all the stuff people leave lying around, that
nobody knows what to do with when they die. For example, you can’t drive your
car after your dead, or spend the money in your bank account. All property you have
that does not automatically go to someone upon your death is potentially probate
(probate-able) property.

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Most individuals do not want friends and family to have to deal with the hassle of
probate court. Most do not want to deal with the hassle because it takes too much
time, and by the time everyone is done with the probate process some items become
“fees” instead going to family and friends.
THE MYTH OF A WILL
The biggest myth out there is that a will (Last Will and Testament) avoids probate!
A will does not avoid probate. Probate is actually what wills are written for. The
best will you will ever have, is the one you will never need. A good estate plan
doesn't actually need a will but it will have one. This does not mean that you “do
not need a will,” as you should have one as a backup, just in case you missed
something. Generally, there are two ways to avoid probate: 1) A Trust, or 2) Good
planning.
SHOULDN’T I JUST GET A TRUST?
Most of us will not have a trust. If you are fortunate to have lots and lots of money
you can have an attorney, well versed in trust law, help you create a trust. A trust is
an arrangement where a human, called a Trustee, handles a fictitious entity, called
a Trust. The Trust is actually given all of the property you want to keep out of
probate. The fictitious entity, the Trust, holds legal title to all property and the
Trustee (the human being) has the ability/authority to do with the Trust property as
he/she sees fit, so long as it fits within the rules outlined in the trust document (the
paper that creates the Trust).
There are differences of opinion in the legal community as to whether everyone
needs a living trust. A basic living trust will cost more than $1,000, but more
complicated trusts can cost thousands. Figuratively, when a person dies with all of
his/her assets (property) in a trust then that person has nothing laying around;
nothing is "laying around" because the Trustee can immediately do whatever the
Trustee is directed to do in the trust document. Explaining the details of exactly how
Trusts work is so complicated that most attorneys don't understand them.
GOOD PLANNING IS KEY
Because most of us will not have a Trust when we die we must practice good
planning. A good planner can create a situation for those left behind that makes
disposing of property simple and easy. It helps if you start with a list of all your
assets. After you have a list you then must figure out a way to make it so that when
you die the person you want to have the property can easily get it, without going to
court or contacting an attorney.

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CHECK THE NAMES OF ALL BENEFICIARIES
You should check the names of all beneficiaries on your life insurance policies. You
should do the same on any retirement accounts (like annuities) or other accounts
where you must name a beneficiary. If you name a person (or persons) as a
beneficiary, who is dead, then the asset will go to the bottomless pit of probate court!
PROPERTY WITH A CERTIFICATE OF TITLE
Many do not realize that use of "transfer/pay on death instruments" can be used for
almost anything with a certificate of title. If you have real estate you can use a
transfer on death deed (covered in previous article). The transfer is only effective
upon your death.
CASH AND BANK ACCOUNTS
You can also name a pay on death beneficiary at your bank, which is also only
effective upon your death. Normally the person who is to get the property through
such a transfer only has to show a certified copy of the death certificate, and it's
theirs.
Another way to avoid probate is the proper titling of property. You should check the
title on any real estate and make certain, if you are married, that you have a
designation of right of survivorship as that makes the property pass directly to the
next person named on the title.
GIFTS
Gifts are another way to avoid probate. Giving away property while you're alive
helps avoid probate for a very simple reason: if you don't own it when you die, it
doesn't have to go through probate. Do not forget, however, that if you make large
gifts, more than $14,000, to any one recipient in a calendar year will require the
filing of a federal gift tax return.
CONCLUSION
With good planning you will only have some personal and sentimental items left
laying around, and your family and friends can take care of everything in a day or
two, with a death certificate and/or a simple affidavit.

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MORE ESTATE PLANNING HUMOR
When Donald found out that he was going to inherit a fortune when his sickly father
died, he decided he needed a woman to enjoy it with. So, he went to a singles bar
where he spotted quite the hottie. Her natural beauty took his breath away. 'I may
look like just an ordinary man,' he said as he walked up to her, 'but in just a few
months, my father will die, and I will inherit 20 million dollars.' Impressed, the
woman went home with him that evening and, three days later, she was his
stepmother. Women are so much better at estate planning than men.
PRESERVING YOUR WILL
If you have a Will you may probably wonder what you should do to preserve it. You
may also wonder how often you should update it and what you can do to help your
family out in the event your Will is needed. This article is being provided to assist
you with making certain your will is preserved, at the same time this article offers
tips on making things easier for your family, in the event the Will is needed.
DO NOT LOSE THE WILL
One of the biggest mistakes of families is the loss of the Will left by a loved one. It
is vitally important that the Will is put with all of your “important legal documents.”
Many times, at the death of a loved one, persons in the family are emotional, and
unfortunately at those times family members may not be thinking as clearly. It is at
this time that family members need all of the help they can get. It is a great help to
make certain that the deceased family member has kept all “important legal
documents” in one location, and that family members know where those papers are
located. Important legal documents include the Will, deeds, financial documents,
insurance policies, durable power of attorney, stocks, bonds, living will, car titles,
trust documents, etc. All of the listed documents should be kept in a safe place, i.e.
a safe deposit box, file cabinet or fireproof box. Most attorneys recommend that you
tell at least two or three people where your Will and other important legal documents
are located.
DO NOT CIRCULATE YOUR WILL
It is not recommended that you tell your family members what is written in your
Will. A Will should never be copied and handed out, as that can cause hard feelings
among family members, and could increase the possibility of confusion, especially
if copies are circulating.
It is also important that the original Will not be written on after it is signed
(executed). Nothing should be stapled, taped or paper clipped to the Will. If the Will

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is marked and/or items are attached to it that contradict what the will states then it
is possible that the Will could be invalidated. If changes need to be made to the Will
an attorney should be contacted. Do not alter your Will in any way, including writing
on it or crossing items out. Again, if the Will is altered it could be invalidated.
TELL YOUR EXECUTOR YOU NAMED HIM/HER
In your Will you named an executor/executrix (the person to carry out your wishes).
Your executor/executrix should be one of the people who are told where your Will
and other important legal documents are located.
UPDATE YOUR WILL
How often should my will be updated? Updating a Will should be considered
anytime there is a significant change in the family. Significant changes include
divorce, death of a family member, marriage, the birth of a new child, loss or sale
of real estate, loss or sale of other personal property specifically mentioned in the
Will, entry into a long term care facility, etc. There is no magic time period, like
every three, five or ten years; generally a review of all legal documents should occur
at any time there is a major change in the family.
When a review of the Will is done there should also be a review of each and every
legal document in your possession. There should be confirmation that all of the bank
accounts have pay on death beneficiaries named. All of the insurance policies should
be checked and verified as to the named beneficiaries. The deeds of all real estate
should be checked and ways to dispose of those items, besides a Will should be
considered.
TRANSFER ON DEATH DEEDS
Everyone has heard a horror story about probate. The cost, the waiting, the forms –
all designed to put someone (a Judge) in charge of overseeing the actions of the
Administrator. Both are working to see that the instructions of the will are carried
out. The system is designed to protect a number of interests – the family, the
creditors, those left out of the will, charitable beneficiaries, etc. Each person in the
process is doing his or her job. It is just that the system of checks and double checks
takes a lot of time. Often, the family situation makes this process unnecessary.
Fear of the probate process has brought forth many alternatives. In 1997, the Kansas
legislature enacted a process to allow families with limited assets to transfer those
items without using the probate courts. This transfer process uses a Transfer on
Death Deed.

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WHAT IS A TRANSFER ON DEATH DEED?
The Transfer on Death Deed is a legal document on which you indicate who you
want to receive your real estate upon your death. The Deed must be executed with
the proper legal description. All current property owners must sign the Deed. The
signatures of the owners must be notarized. The Deed must list all the persons who
should receive a share of the property at your death. The Deed is then filed at the
Register of Deeds office in the county in which the real estate is located. There is a
small charge for recording the Deed.
ONCE THE TRANSFER ON DEATH DEED IS FILED,
CAN I CHANGE MY MIND?
Yes, you may revoke the Deed or change the beneficiary of your real estate at any
time prior to your death.
WHAT IF I SELL MY HOUSE BEFORE MY DEATH?
Then the Deed takes no effect. It is a legal document that only transfers interest in
your home at the time of your death. If you don't own the house when you die, then
there is nothing to transfer. Also, since your beneficiaries don't own anything until
your death, you don't need any permission from them to sell the property before
your death. You are free to do anything that you could do prior to the execution of
the Transfer on Death Deed.
WILL THIS COUNT AS A TRANSFER OF ASSETS AND CREATE A
PROBLEM FOR MEDICAID ELIGIBILITY?
No. Again, nothing transfers before your death, so there is no transfer of assets.
However, the use of a Transfer on Death Deed does not eliminate the possibility of
Estate Recovery, if you need Medicaid payments for nursing home care prior to
your death. Only in this situation would the State of Kansas have any interest in
your home.
I HAVE A MORTGAGE ON MY HOME. MAY I STILL USE A
TRANSFER ON DEATH DEED?
Yes. The transfer only happens at your death. You are still responsible for the
mortgage payments prior to your death. The mortgage, if unpaid, would still have
to be paid by your beneficiaries, unless you have some type of mortgage insurance
that will take over the payments. The Transfer on Death Deed cannot be used to
avoid any obligation that may go with the property, such as liens, mortgages, taxes
or other claims.

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AFTER MY DEATH, WHAT NEEDS TO BE DONE?
After your death, a beneficiary will need to file a certified copy of your death
certificate with the County Register of Deeds. This is generally sufficient to transfer
title to your beneficiaries. They will then be allowed all rights of ownership and can
sell or use the property and become responsible for property taxes, etc.
MY HOME IS IN JOINT TENANCY WITH MY SPOUSE. WE WOULD
LIKE TO LEAVE OUR HOME TO OUR CHILDREN, AFTER OUR
DEATH. CAN THIS BE DONE WITH A TRANSFER ON DEATH DEED?
Yes. The joint tenancy deed will transfer the home to the surviving spouse. The
Transfer on Death Deed, signed by both spouses, will transfer the property to the
children (beneficiaries) upon the death of the surviving spouse. At that point, the
children will need to file a death certificate for both parents.
You will need to decide how your children will own the house, either individually,
as joint tenants or as tenants in common. These choices only matter at the death of
the children and determine whether one child's share goes to the other children (in
the case of joint tenancy) or to the deceased child's heirs (in the case of tenants in
common).
DOES THIS AVOID TAX CONSIDERATIONS?
No. However, in Kansas now there is no estate or inheritance tax for children
inheriting, unless the estate is large enough to require Federal Inheritance Tax
payments (estates in the millions of dollars in assets).
HOW CAN I GET A TRANSFER ON DEATH DEED?
You will need to contact an attorney in order to get the document prepared. It is a
legal document and affects the future titled to your real estate. If you are age 60 or
over, you may contact the Kansas ElderLaw Hotline at 1-888-353-5337. You may
also visit with the Senior Law Project attorney during their visit to a nearby Senior
Center. There is no charge for the legal work of the Senior Law Project attorney,
who is funded by your local Area Agency on Aging.
ELIGIBILITY FOR MEDICAID
The average cost of nursing home care in Kansas is more than most people can
afford. Many individuals who need nursing home care worry themselves as to how
they are going to pay for it. Others worry that they will have to waste their savings

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and assets. In the end many end up having to look to the government to pay for the
nursing home care through Medicaid. Medicaid is a state and federal partnership
that assists in providing health care to the poor. Medicaid is a welfare program, and
in order to participate the recipient of its benefits must qualify. Many do not
understand how the program works and end up making very poor financial
decisions. The secret is to not be afraid, or ashamed to apply for the benefit because
the worst thing the government can tell you is, “No!” and then you are no worse off
than you were before you applied.
WHO QUALIFIES?
This article is not going to give you a list of questions and tell you at the end if you
qualify for Medicaid. Rather, it is going to attempt to explain how Medicaid eligibly
works, and is a mere “scratch of the surface.”
If you want to know if you qualify you have to apply. Before one makes an
application you must have a medical need to be in a nursing home type facility. The
applicant will be required to complete a CARE (Client Assessment and Referral
Evaluation) screening prior to, or soon after admission.
The trick is to apply for the benefit as soon as you need nursing home type care.
Medicaid is a “welfare program,” meaning it is a program offered to the poor. This
means that it is exclusively for those who need it, because they financially cannot
afford the nursing home type care. Keep in mind that your definition of poor may
not match the government’s definition of poor. There are many who are poor, and
should have been getting the benefit a long time ago, but aren’t because they thought
they would not qualify. On the opposite end of the spectrum there are others who
have sought to beat the system, attempting to make themselves appear to be poor on
paper, and get a benefit they do not qualify for.
SO HOW DOES UNCLE SAM DEFINE “POOR?”
In order to meet the qualifications of the Medicaid program the applicant’s income
must be less than the private pay cost of the nursing home care. Attribution of
income to the applicant follows the “name on the check” rule, that is, income is
attributed to the person to whom payments are made. For example, if the applicant
is married and he receives a check made only to the applicant, that check is attributed
to the applicant. However, jointly held income-producing property is allocated pro
rata. For example, if payment is made to the applicant and his or her spouse, the
income is divided between the applicant and the spouse on a pro rata basis. If a
Medicaid recipient is receiving income, most of the recipient’s income will be
applied to nursing home expenses. The recipient will normally be allowed to keep

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a minimal amount of money each month for personal needs, like haircuts and
personal hygiene products.
The applicant for Medicaid cannot retain over $2,000 in non-exempt assets. In other
words, the Medicaid applicant must not own more than $2,000 in non-exempt assets.
Some examples of non exempt assets include cold hard cash, more than one
automobile, more than one house, etc. Exempt assets include, the applicant’s home
(which he or she resides in), a vehicle, household goods and personal effects, life
insurance with a death benefit of $1,500 or less, materials used in an income-
producing trade or business (including rental properties), and prepaid burial plans.
Many have the notion that he or she must have less than $2,000 in cash before they
can qualify, but this is not exactly true. Qualification can be very tricky, and that is
why it is essential to just go ahead and apply. What is exempt and no-exempt can
get very dicey, and if you have the money, it is recommended to get an attorney
versed in Medicaid law to help you with the application.
WHAT IF I AM MARRIED? DO BOTH OF US HAVE TO BE POOR?
The quick answer to this question is emphatically, “No!” You may have heard of
something called “Spousal Impoverishment.” Spousal Impoverishment is when one
spouse is made to qualify for the benefit so that the other spouse is not left
financially destitute. Sometimes the process is called “Division of Assets.” The goal
of the process when there is a sick spouse, and a well spouse, is to set the well spouse
up so that he or she is able to live independent of welfare as much as possible. A
person (hopefully a qualified competent attorney) giving good advice on how to
divide the assets between the sick spouse, and the well spouse, will help in making
decisions about how to get as many exempt assets in the well spouse’s exempt
column. This allows the well spouse to protect a portion of his/her income and
resources without being impoverished.
THE WELL SPOUSE CAN KEEP A GOOD AMOUNT OF COLD HARD
CASH & INCOME!
The most shocking surprise of many applicants for Medicaid is how much
nonexempt property (like cold hard cash) the well spouse can keep. The well spouse
can keep one-half of all non-exempt resources owned by one or both spouses with
a minimum of $23,844 and a maximum of $119,220.
Once the resources of the couple have been divided, the well spouse will not be
required to contribute any of his or her own exempt income or assets towards the
cost of the sick spouse’s care. All other assets will have to be spent by the sick
spouse. What sometimes happens is the couple will not apply for Medicaid, and
deplete all of their nonexempt assets (cash), leaving both persons financially

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destitute, and then when the couple reaches the end of their rope, and finally applies
for Medicaid, and get it; it is then they learn that they should have applied a long
time ago and done a division of assets, and then the well spouse would have been
able to keep more.
Many do not realize that the well spouse may be able to keep a portion of the sick
spouse’s income, for the well spouse’s own use. The well spouse can keep part of
the sick spouse’s income if the well spouse has a monthly income of less than $1,967
per month. Depending on living expenses, the maximum amount of income a well
spouse can keep each month is $2,981. In addition, if there are shelter expenses
(rent, mortgage, taxes, or insurance) in excess of a certain threshold then the well
spouse may be entitled to an allowance that is even greater. There is also a special
allowance given monthly for any dependent family members living with the at-
home spouse, i.e. a disabled adult child or other dependant, like an adopted
grandchild. The specific amounts listed here are subject to change annually.
SPENDING DOWN
After the assets are divided between the well spouse and the sick spouse, the sick
spouse has to spend all of the nonexempt assets, and his/her own assets, down to
less than $2,000. Many have the thought that the sick spouse is required to just pay
the nursing home bill every month until the money is depleted, but this is poor
planning and bad advice. It is true that the sick spouse has to “spend down” his
portion of the marital assets before Medicaid will kick in, however, those funds do
not have to go solely to the nursing home. The sick spouse can set the well spouse
up in a strong financial position, but the sick spouse has to follow the rules set by
Medicaid so as not to be disqualified for the benefit.
HOW DOES THE SICK SPOUSE SET THE WELL SPOUSE UP?
The government does not want to leave the well spouse financially destitute, and so
the answer to the question goes back to good advice from a qualified, competent
attorney, especially when there is a nest-egg of non-exempt property.
One question often asked is whether the Medicaid applicant can just give his or her
assets away in order to spend down to the $2,000. The short answer to this question
is “No way!” but the sick spouse can be very creative in how he or she spends that
money, so that it is spent in such a way that it benefits the well spouse.
The applicant for Medicaid cannot transfer assets for less than adequate
consideration, a fancy way of saying, selling the second car for $5 or the farm for a
buck is not allowed. If this type of thing is done the applicant will be disqualified
from the program. When determining eligibility, the government will use a “look-

16. 16
back period.” The look-back period can be anywhere from 36 to 60 months
depending on if it is just a transfer (36 months) or a transfer to a trust (60 months).
The transfers made within the look-back period may incur one month of ineligibility
for uncompensated value. The penalty is calculated by dividing the value of the gift
by the average monthly cost of nursing home care. The penalty period begins to run
at the time of the transfer.
So what is the secret? The secret is the sick spouse can spend down by providing
for the well spouse. Does the well spouse need a new car? A new roof? A new
wardrobe? Extra groceries (nonperishables)? A prepaid funeral? New furniture?
New windows? It is smarter to spend money on those items instead of giving it all
to the nursing home. This sets the well spouse up in a stronger financial position.
How the money is spent should be guided with sound legal advice.
I HAVE MORE QUESTIONS, WHAT DO I DO?
Medicaid eligibility is a complicated matter. This article is not an exhaustive
discussion. If you have more questions, or something is not clear, please contact
the Kansas Department on Aging at 1-800-432-3535, or the Social and
Rehabilitation Service Office near you, or the Kansas Elder Law Hotline at 1-888-
353-5337.
NOTES

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The information in this booklet is provided as a public service by Kansas Legal
Services, It was compiled by Paul Shipp (Managing Attorney in the Flint Hills
Offices of Kansas Legal Services). It was written to provide you with helpful
information regarding the subject matters covered. This publication must not be
used as a substitute for the advice of an attorney. If you require legal advice then
you should seek out a qualified, competent attorney.
Distributed by the Flint Hills Offices of Kansas Legal Services, 104 South Fourth
Street, Manhattan, KS 66502; Phone: 785-537-2943.
For assistance with Elder Law Questions, Call: 1-888-353-5337
If you need any of the articles contained within this pamphlet in larger print or
alternative media so that you can review it please feel free to contact the Flint Hills
Offices of Kansas Legal Services directly. Anyone may copy and reproduce the
information contained herein so long as no fee is charged to the recipient.
Copyright © 2015
By
Kansas Legal Services
This publication may be reproduced and distributed
provided it is done at no cost to the recipient.
Kansas Legal Services offers Free and Reduced
Cost Legal Services. If you need help with a
legal problem you may want to contact us, we
serve the entire state of Kansas: 800-723-6953
(Marilyn Harp, Executive Director)