Spousal Refusal in Medicaid Planning
Spousal Refusal is a Medicaid Planning tool that Elder Law Attorneys use for their married clients. Essentially, the Medicaid spouse transfers all of the his/her assets to the "well" spouse who then signs a paper to the state that says the well spouse refuses to pay for the medicaid spouse's healthcare. Medicaid allows this because of an IRS rule that allows for transfers between spouses.
It is a very effective technique. Unfortunately, some Elder Law attorneys do not fully understand the process and do not properly complete the paperwork.
A recent case in Missouri had a couple transfer their assets into two different LLC's, and then from each LLC back to the "well" spouse. As you can see, this creates a gift of the medicaid spouse's assets, rather than a marital transfer. When you do the planning, you need to fully understand how it is working. If your attorney can not explain it to you, then find another attorney. The cost of engaging a new attorney is less then the cost of not getting Medicaid.