The Effect of the Elective Share on Medical Assistance Estate Planning

Written By: Attorney Jeffrey A. Marshall, CELA*

1. What is the elective share?

The purpose of the Pennsylvania elective share rule is to provide a surviving spouse with a reasonable share of a decedent's estate. This is meant to protect the surviving spouse from becoming impoverished by an inadequate inheritance. In Pennsylvania, the surviving spouse is entitled to approximately 1/3 of certain property interests. The surviving spouse may either claim this "elective share" or "waive" it. If it is waived the surviving spouse gets to keep whatever he or she receives as a result of the will and other arrangements made by the decedent.

When one spouse is admitted to a nursing home and may need financial help from Medical Assistance, the spouse at home ("community spouse") often transfers all of the couple's assets to sole ownership by the community spouse. If the community spouse is the first to die, assets inherited by the institutionalized spouse will disqualify that spouse for Medical Assistance. In order to preserve the Medical Assistance benefits for the institutionalized spouse, and provide for an inheritance for the couple's children, the community spouse will frequently sign a new will that disinherits the institutionalized spouse. The idea is to have the couple's assets pass to the children where they will be protected from nursing home costs.

However, if the institutionalized spouse elects to receive the 1/3rd elective share, that election will take priority over the community spouse's will. The receipt of the elective share will normally make the institutionalized spouse ineligible for Medical Assistance and the elective share inheritance will have to be used to pay for nursing home costs.

In the past, the institutionalized spouse could waive his or her elective share, and thereby protect all of the assets from nursing home costs.

2. Does the Department of Public Welfare require that the institutionalized spouse claim the elective share?

Yes. Within the last few years the Department of Public Welfare has begun to require that the institutionalized spouse or his or her authorized representative claim the elective share of a deceased spouse's estate.

3. What if the institutionalized spouse chooses to waive the elective share?

If the nursing home spouse or his or her authorized representative waives the elective share, the Department of Public Welfare will deny Medical Assistance eligibility based on the theory that there was an available asset that could have been collected and thus used to pay for the nursing home resident's care. The waiver of the elective share will be deemed to be a transfer of assets by the institutionalized spouse which will create a period of ineligibility for Medical Assistance.

4. How will the Department of Public Welfare determine the amount of time the institutionalized spouse will be ineligible for Medical Assistance if he or she waives the right to receive the elective share?

The Department of Public Welfare will consider the non-election as a transfer of assets for less than fair consideration and deny benefits for a period of time based on the value of the elective share¸ the average cost of nursing home care for one month and the answer is the number of months of Medical Assistance ineligibility due to the failure to claim the elective share.

The Elective share is a complicated planning issue. But, effective planning by a knowledgeable elder law attorney can reduce the negative impact of the elective share on the continued eligibility of the surviving spouse for Medical Assistance benefits. It is extremely helpful if appropriate lifetime planning was completed, including appropriate provisions in powers of attorney and wills.

Return to the Planning for Medicaid Benefits Page

Return to Marshall, Parker & Associates' Home Page