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Can My Mother Transfer Her Life Insurance Policy to My Disabled Sister?

  • June 8th, 2015
My mother's life insurance policy was purchased to benefit my disabled sister, who receives Social Security disability benefits. My mother is applying for Medicaid and the policy's value is too high.  She needs to spend down the policy in order to qualify, but this will leave my sister with nothing. Is it possible to transfer the policy's cash value to my sister so that my mother can qualify for Medicaid? 

While most transfers by a Medicaid applicant would make the applicant ineligible for Medicaid benefits for a period of time (called a penalty period), there is an exception if the applicant transfers assets to a disabled child. Transferring the assets directly to your sister, however, could negatively affect her ability to receive disability benefits. Your sister can protect her benefits if she has a special needs trust. These transactions are very complicated and should be handled by an attorney. Here is a directory of attorneys who work in this area of the law:

For more information on Medicaid’s asset transfer rules, click here.  

Local Elder Law Attorneys in Ashburn, VA

Loretta Williams

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Margaret O'Reilly

Margaret A. O'Reilly, PC
Herndon, VA

Jean Ball

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

For information about special needs trusts, click here or visit our sister website, Special Needs Answers

Last Modified: 06/08/2015

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