Attorney Thomas B. Burton answers the following question: "Can I Pay for Sister's Funeral with Met Life Check Received After Her Death When I am on SSI?"
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Thomas: Okay, Welcome back, we're here on a lovely summer evening on the Monona Terrace in Madison, back to answer your questions and once again I'm joined by Madison attorney, Matthew Underwood and Matt, thanks for joining us!
Matt: Thanks for having me Tom, it's great to be out on the Monona Terrace.
Thomas: I know, I am just enjoying this summer weather, it puts me, personally in a great mood for estate planning questions and . . .
Matt: absolutely, yeah, this is such a great environment to answer estate planning questions so . . .
Thomas: I know that's what a lot of people you know, traditionally, they love to come to Monona Terrace to do think about estate planning as you're overlooking the lake and Matt I've got, why I'm also smiling is I get to read the question and you can answer it and so we'll get right into it, the reader says –
"I am in Wisconsin, I received SSI, I received a check from MetLife after my sister's death. I was a beneficiary, the check was for $7900 I have to keep my resources under two thousand for SSI. I want to spend the money on my sister's funeral cost. Can I do that? What do I do with the check?"
Matt: This issue comes up quite a bit and it depends a lot on the beneficiary situation, so you know some people don't realize that when somebody receives an inheritance, it could jeopardize the benefits they're receiving, it could be health care, it could be Income, SSI benefits. So it's not enough to really look at somebody's estate plan, we also want to look at the type of situation those beneficiaries are in.
So you know to qualify for needs based programs like SSI and Medicaid you need to have less than $2,000, non-exempt assets so the that's what the readers saying and so, even if you receive you know, even just a few thousand dollars of an inheritance that would put you over that asset limit and you would be disqualified from your benefits until you spent through that inheritance and once you ran out of money again or once you're below that $2,000 limit then you could re-qualify for those benefits.
So, you know, thinking about some strategies, how do we get around this and how do we allow people to receive the inheritance but also retain the sorts of government benefits they might be receiving, one of the ways we could do that is we could actually form a special type of trust called a Wispact Trust and so with that the beneficiary would actually have a trust account with Wispact and Wispact is a really well-run organization located here in Madison, Wisconsin. I mean that way that beneficiary will have an account with that inheritance money in it but then they would also be able to keep Social Security, Medicaid whatever other benefits that they're receiving.
The only kind of downside potentially to this structure is that when you give your money to that Wispact account, you basically lose your own access to it, so now you need to work through the trustee to get any sort of distributions but that's kind of what you have to give up in order to get those protections from the Wispact trust.
So when you're faced with receiving an inheritance and in losing public benefits, there are some different options, so really I would encourage people to talk to a qualified estate planning attorney and not every estate planning attorney or a probate attorney will understand this situation. You'll want to talk to somebody who also has a background in Elder Law and Public Benefits and Medicaid planning, so that way we can basically get the optimal results for you and one other point to this question briefly this reader says, well, “can I use this inheritance to pay for my sister's funeral”, you know as, when you receive that inheritance and that's just an outright distribution, you could do whatever you want with that money, if you'd like to spend it on yourself, if you'd like to spend it on a family member, you know, that's really up to you but I guess if the goal is you're spending it on a funeral so that you don't lose government benefits, there's other ways to get around that. So that's where we'd be looking at Wispact or some other planning options.
Tom what are your thoughts on this situation?
Thomas: yeah I feel for this reader because I think she's trying to do a noble thing. It sounds like the sister's funeral there must be some costs that haven't been paid and I think one thing I see here is it's unfortunate, sometimes I think people don't understand how with the life insurance company, the beneficiary designation on their bypass probate, so with this other sister who's on needs based assistance, in reality, she probably didn't want to inherit the $7,900 because it's going to interfere with her SSI and maybe it would have been better for this money to go through the sisters estate to pay for her funeral. If in fact there's funeral costs that haven't been covered here.
So I feel for the reader because it sounds like there's uncovered cost but yet a check got issued to her name, so it's going to cause her some issues and I salute her for wanting to do the right thing with you know, use it for her sister's funeral but I agree with Matt, I think you're still going to be under an obligation to report this funds to SSI and that happened the minute they issued the check directly to you.
So that's not your fault, it's just the way the situation is unfolding here and if we could have talked to the sister that passed away before she died, we would have maybe said direct this money to pay for your funeral costs etc.
But now that you're in this situation, I would do like Matt said and take a hard look at setting up that Wispact Trust because you could do it in the month you receive the check and then avoid being disqualified for SSI and those funds could be used for your Health's maintenance and Welfare over your lifetime which is likely something your deceased sister would feel good about for you and then for our other readers watching, if you have a beneficiary with special needs, I would encourage you to talk to your attorney ahead of time, so that we can set up that special needs trust right inside your documents, so that you don't inadvertently leave someone in a situation like this where it's a small amount of money but it's going to cause problems for them with their governmental benefit.
I think there's a lot of ways people can learn from this scenario and also again like Matt said Wispact is a nonprofit in Wisconsin and does an excellent job with these trusts and they have set up a way to set up cost efficient for a smaller amount of money like this and they do require all beneficiaries to work with a qualified estate planning attorney when you set up one of these trusts. So that's why as Matt mentioned I think you want to find a good attorney in your area to help you put it together if you decide to pursue that route.
Matt: yeah absolutely Tom and I think you hit on one good point is, there's an opportunity for people when they set up their estate plan to basically provide for beneficiaries that might be in that situation and set up some sort of trust or other mechanism to protect that beneficiary but if that doesn't happen and now the beneficiary is kind of faced with this situation, there's basically other options on the table as you said Tom, you know, Wispact Trust, so in, I think the other point of these types of cases is, a lot of this is time-sensitive, so we don't want a beneficiary to receive an inheritance and then you know wait a few months to take action on it. If the goal is to retain or to keep those public benefits, we need to move quickly. So, you know, contact that attorney and then look into your options right away, so you can have that continuity of benefits.
Thomas: Great question, thank you, to the reader for writing, thank you Matt for joining us again.
Matt: Thank you Tom.
Thomas: and thank you all for watching on this lovely summer evening, have a great day and thanks for watching.
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