[WSBAPT] One-Sided CPA and Step Up

Wed Jul 20 11:56:01 PDT 2022

Great input from everyone, thank you! Regarding the Medicaid issues, I should have been more precise. If the person were actually on Medicaid, the only community property asset retained (if the Medicaid spouse passed away first) would be the exempt house. If the Medicaid spouse was only a potential Medicaid spouse, i.e., not on Medicaid yet, it could involve other assets. Also, the reason for it to be separate property if the community spouse passes away first is so all of the house could pass through the will and into the SNT and not half.

Thanks,

Jacob

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Heather de Vrieze
Sent: Wednesday, July 20, 2022 9:05 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] One-Sided CPA and Step Up

Jacob,

I believe, with no legal basis to back it up, that a deed transferring property out of one spouse's name, to the other spouse, to comply with the state's Medicaid rules (and avoid a lien) does not necessarily change the character of the property as community property for tax purposes, so, agreement regarding status of property or no, the basis step-up at death of Medicaid spouse should still be available. Particularly, I see the fact that if the deed to the community spouse was intended to be paired with a SNT in community spouse's estate plan, the intent of the parties was to protect the property for each spouse's particular needs, not to truly make it not community property.

I have not contemplated a CPA that is one-sided as a way to prove this, but don't see how that would hurt.

Heather

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From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Jacob Menashe
Sent: Wednesday, July 20, 2022 8:01 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] One-Sided CPA and Step Up

Hi again!

I'm curious if my post didn't get a response because  what I am thinking about-a spousal agreement that goes one way or the other depending which spouse passes away first-is so far off base. If so, doesn't anybody want to chime in about that? Also, as mentioned below, I am more than happy for someone to volunteer themselves for a consult on my query.

Thanks!

Jacob

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Jacob Menashe
Sent: Friday, July 15, 2022 3:35 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] One-Sided CPA and Step Up

Hi all,

I am thinking about a Medicaid situation where Sally is the one needing care. John is the community spouse, i.e., the spouse at home not needing care. In a scenario with a community property agreement that says:

  *   Assets are community property.
  *   If Sally, the Medicaid spouse, passes away first their assets pass per the CPA to John.
  *   But if John passes away first, everything becomes his separate property right before his death and nothing passes at death per the agreement. (Instead, his estate will flow throw his will and, as is desired, end up in the special needs trust for Sally).

Does anybody have a comment or experience to share about whether this is likely to accomplish both objectives-i.e., the community property step-up if Sally passes away first and the full funding of the special needs trust for Sally if John passes away first?

If someone has a lead on a response but it doesn't translate well to a list serve response, I would be very happy to make this a paid consult to discuss my query. If someone is up for that, please feel free to respond to me, and my associate Mercedes Vargas (mercedes at hickmanmenashe.com<mailto:mercedes at hickmanmenashe.com>) directly.

Thanks!

Jacob

Jacob H. Menashe
Hickman Menashe, PS
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