By getting him on Medicaid, I was able to keep my house, a car, some life insurance and just more than $70,000 in cash. Since my only income was Social Security and some small interest payments, I now receive most of my husband's Social Security. But I am still struggling financially. Our two children are concerned about me and want to give me $12,000 each year as gifts. I am afraid that if they give me money and I go over the limits, my husband will lose his Medicaid, and I will be back where I started. How can they help me without disqualifying him?

A: According to a federal law passed in 1988, once your husband ("the nursing home spouse") has qualified for Medicaid, you ("the community spouse") are "split off" from him, and your assets are no longer considered available to him. This means that under the current state of the law, you could now win the lottery and your assets would not be available to pay for your husband's nursing home care. However, if your income increases, the amount you receive from your husband's Social Security will decrease by that amount. If your children are thinking about helping you in a meaningful way, you and they should seek out the services of a qualified attorney who can assist you in preparing and implementing a plan.

Q: My wife is in a nursing home and is on Medicaid. I have terminal cancer and a life expectancy of six months. I own a house and have nearly $50,000 in cash, which I want to go to my children, because, if it goes to my wife, she will be disqualified from Medicaid and the assets will be lost. I hired a lawyer to help me with my will, and he told me that under the law of our state, I must leave my wife at least one-third of my assets without exception. Is this correct?

A: Not quite. Under the law of many states, a surviving spouse has a statutory right to what is called an "elective share," which amounts to one-third of your probate assets. You can, however, utilize a QTIP (Qualified Terminable Interest Property) trust into which one-third of your assets would be placed at your death, and from which your wife would be entitled to distributions of income only. At her death, the trust would pay the principal to your children.

The other two-thirds could be left for the benefit of your wife in a special-needs trust that can be established in your will. In this way, you can make sure your wife receives certain benefits during her lifetime without disqualifying her from Medicaid. You would name one of your children as trustee. At your wife's death, the trustee would distribute remaining assets to your children.

The advantages of this type of a special-needs trust include (1) the ability to separate trust distributions from your wife's actual income so she can receive additional benefits without disqualifying her from Medicaid, (2) the assets of the trust will not be subject to payment of medical bills and will not risk your wife's medical coverage; (3) your wife will be able to receive things she may need but which are not covered by governmental programs, and (4) the cost of administration is not great if a child is the trustee. On the other hand, (1) the trust must file tax returns and have its own federal identification number, (2) the trustee must be schooled about how to distribute the funds and for what, and (3) the paperwork is complex, and an attorney must prepare the documents and advise the trustee.

We recommend that all elderly people consider wills with special-needs trusts as part of their planning process. Because of the complexities involved, these trusts should be drafted only by attorneys who are competent in this field of law.