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I have more than $10,000 in credit card debt.

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You can pay credit card debt, but make sure your state law allows it.
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Yes, you can pay down credit card debt. You can also buy a car or spend the money on other things you need. Most of all, make sure you save the receipts because they may be needed as proof of spend down. I don't think it really matters what you spend the money on as long as it's actually spent down. What I would do with the inheritance is definitely use some of it to get a car and some of it to pay off my final expenses, but don't pay the funeral home directly. What I would do is put the money into some kind of POD account to protect it until it's actually needed. This would definitely be a very smart move so that you know your wishes will definitely be honored as long as you have an actual funeral plan. You definitely want to make those plans with your local funeral home but definitely put the money into a POD account. The reason why you don't want to give it to the funeral home is because the funds can actually be misappropriated or the funeral home can actually change ownership. When this happens and customers have funeral plans, new ownership sometimes will not honor those plans, leaving customers to sometimes have to make new plans under the new ownership. This could also hurt you if you've already paid the previous funeral home owners sure the funeral home change ownership. This is why I strongly suggested a POD account. Putting money aside for absolutely necessary expenses is definitely a very smart move when you have financial breathing room.

Paying off old debt is another smart move. Look up your state's SOL laws on credit to make sure you're not resetting the clock on old debt. $10,000 definitely doesn't go far these days, so definitely spend wisely because you may never get another chance to get another inheritance. To get one big inheritance is definitely a miracle, but to get two of them is extremely rare but it does happen. Be very careful though because if this money happens to be coming from a life insurance company, you may be faced with the difficulty of getting the insurance money to turn over your money. That's because you may find times for sure it's company actually drags their feet and just doesn't want to pay out. That's where your states department of insurance will come in handy. I'm actually facing this right now regarding some money off of my bio dad's life insurance policy, and the insurance company won't pay out. When I got a hold of a lawyer, the lawyer suggested I get a hold of my state's department of insurance and I actually did. Now, if this money is not part of an insurance policy, it may have to go through probate, and this could actually take a while. When you finally do get the money, you may even want to put the money into some kind of tryouts if you actually trust someone with that much money. If not, you could actually put the money into an annuity. Find out what you need to do to protect your benefits as well as your inheritance.

Setting some money aside will be key to keeping you from hurting financially at the end of each month. This is yet another smart move, because look how many people are actually hurting at the end of each month just because there's not enough money to go around. Use what you are given to your own advantage and better your life for the long-haul and not just the short-haul.
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In my state, that would be fine. However, be sure you are in "spenddown mode." If you have not yet applied for Medicaid, then there is, so far as I know, no spendown in process....(I say this because we came across an attorney who wanted to divide the money between my spouse and me and spend her half on her care and I would keep my half....That is not how it works..You must apply for Medicaid in order to be able to enter the spenddown mode.)

Grace + peace,
Bob
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MizEllie, you can use the money to pay down debit, purchase a car as mentioned as you are allowed to own 1 car and a home. You can also prepay your own funeral or cremation services. If using to pay your funeral have the funeral home put the money in an irrevocable funeral trust as this will not be counted as an asset. This is a loving thing to due taking the burden of funeral expenses off your family when you pass. You cannot give the money to anyone as a gift as this will cause red flags and hinder your application. Wish you the best as you move forward on your journey.
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Private, I was wondering if you could explain how one would set aside moneys for extra things. If I am correct medicaid only allows 2000.00 in assets aside from a car home and funeral trust. How could someone put aside extra funds? Not attacking your comment just wondering if I was missing something. Thank you.
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Private, yes...what is a POD account? Why would that be allowed if applying for Medicaid down the road?
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ramiller,
I think that it depends on your state. Our state allows 4,000 in savings/checking.

Bob, Are you sure he wasnt trying to get you to do a spousal impovershment?
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"Payable on Death" account?
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Ramiller, those are the qualifications I am familiar with, also. (If person is currently eligible for Medicaid) If person has a spend down amount to meet EACH MONTH before their Medicaid 'kicks in'; they would have have to pay that amount in MEDICAL expenses and have receipts to give to their worker in order for they are Medicaid eligible FOR THE MONTH. It's like a deductible and cannot be spent on 'anything'. Example: If one has $1,000 spend down amount, they would have to pay $1,000 out-of-pocket MEDICAL expenses, such as prescriptions, Dr's visit, prescribed over-the-counter items, etc., Give their worker the receipts, and on the DATE they reach that amount, the person would have Medicaid from THAT DATE till the END OF THE MONTH. (Example: Jan. 12th paid $1,000 out of pocket medical expense - person has Medicaid from Jan.,12th - 31st ) I know it's confusing to many people and I hope I didn't make it MORE confusing.
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After reading other responses -- I am in Michigan and that is for ONE person. Having a spouse that amount may be, and probably is $4,000.
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When I say $4,000 -- I am referring to assets for a couple, or $2,000 for single person, not including their home or one vehicle. A term life insurance policy is not included, but a whole life policy does, as it has cash in value. If you are over that amount, acquiring a pre-paid burial arrangement can help you bring down your assets.
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HI innerchild!
I am in Nebraska and it is $4,000 for a single. What kind of spend down is is being referred to here? In Nebraska, we refer to a "spend down" as the amount of income that you are over the threshold for qualifying. You must then appropriately spend it down; i.e. funeral, insurance, etc. We call what you are referring to "Share of Cost". When you qualify for some benefits, but must pay a certain amount of your medical bills each month before they kick.
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My Aunt was on SSI and medicaid for hospitalization. She was able to live in her own home. At that time you were allowed 1500. She used $500 of the $1500 to repair her car. Medicaid called and wanted to know what the $500 was for. They told her they needed to know when she planned to pull out money she had to call them. So, the money is yours but isn't.
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Hi chunkiemunkie! I reside in Michigan. I should have mentioned that, as Medicaid varies from state to state. Yes, "spend down" in amount of income you are over the threshold to qualify for Medicaid. Other terms may have been changed since I was familiar with 'benefits', but yes, otherwise what you wrote is true for Michigan. Last I knew, it was $2,000 in assets for Michigan.
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Kudos to all for comments.....I went through a TON of work and getting financial records collected in our spenddown. Spenddown in my state has nothing to do with excess income...it has to do with assets over a certain amount...It is way too complicated for me to explain here. In summary, the community spouse is allowed to keep half of assets owned by either self or spouse or jointly, but not more than about $120,000 in total kept by community spouse (the one still at home). My advice is go to a qualified attorney....We visited three who didn't know their way out of a paper bag. In my state Medicaid has to be applied for before the spenddown of assets commences. (note to poster earlier. The lawyer I mentioned was not trying to get my spouse impoverished...He thought he was suggesting that, but he didn't know the rules.)
There is no upper limit in my state of income for the community spouse, just for the Medicaid applicant..It is very complicated.
Grace + Peace,
Bob
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After doing much research i think we need to know what kind of spend down are you talking about? Do you have a monthly spend down as innerchild referenced or are you talking about spend down to quilify for nursing home coverage. There is a big difference and the answer will be different depending on which spend down you are refering to.
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MizEllie, if you are already on Medicaid, contact your caseworker, because you have to report the $10K. Rules vary from state to state, so you need to know the specific rules for your state. In Wisconsin
• Countable assets maybe converted to an income stream by the purchase of a Medicaid qualified annuity
• Countable assets may be made unavailable by loaning money to children in exchange for a qualified promissory note
• A divestment with a qualified partial cure arrangement may reduce a Medicaid spend down from 100% to 50% of the applicant’s countable assets (e.g., reverse half-loaf technique)
• Establish “Special Needs Trust” through a “Pooled Trust” managed by a non-profit association such as WisPact or WISH Pooled Trust.
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For those of you wondering, my first answer to your question about a POD account is that it is called a "Payable on Death" account. This can be used toward your final expenses. Just make sure to mention it in your will along with its whereabouts.

Now, as for dealing with a spend down, again, you can get a car with that model if you absolutely need one. If you don't have a car, now would be the perfect time to get one if you already have your inheritance money.

As for setting aside money for emergencies, this is a very smart move, especially in a world where so many people are hurting financially. When you inherit money, it's up to you aside money for a rainy day. Let's say you're always scrape and financially toward the end of each month because Social Security just isn't enough to live on. This would be a perfect time to set aside some money and even start a few CDs or even an annuity. Check with your bank to explore your options.

If you use a trust, make sure that you absolutely and completely trust your trustee. I spoke with spoke with a lawyer in my state, only to discover that there is nothing stopping a trustee from abusing you financially. This is the downfall of a trust, because when you turn your money over to a trust, you surrender ownership to that person who now owns your money. Surrendering money to a trust means you no longer own that money. This is rather risky. That's why more and more people are turning away from using a trust and finding alternate ways to protect their money and assets. In some cases, a trust can be very beneficial for protecting elders and other age groups against fraud such as what scammers do. Anytime you decide to use a trust, you do so at your own risk. This may be why some people just won't sign anything, (and I don't blame them). This can be a good thing to some great degree. However, this can also be a bad thing in certain situations as we all know. This is why we must all use serious discretion where money and assets are involved.
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I forgot to say that if you have more debt than your inheritance can cover, you may not want to spend all of your inheritance money on that. Remember, this may be your last chance at a real financial break, so find very constructive ways to enjoy the money and to help yourself to live a better life if you happen to be scraping financially and barely making it. My bio dad died and left behind and it a life insurance policy, and the insurance company is yet to pay out because they're dragging their feet. This is why I got my states department of insurance involved because I'm the only one left in my bio family. It makes me think the insurance company is actually taking advantage of a very unfortunate situation, and come to find out that insurance company actually got a terrible rating, I saw the ratings and reviews for uniCARE life insurance for Ford Motor retirees. You may see this for yourself, this is why I got my states department of insurance involved, and they can make this place do the right thing
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Make sure you have and KEEP ALL CHECKING ACCT/ OTHER ACCT RECEIPTS FOR THE 5 YR LOOKBACK!!!!
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Many, many thanks to the folks who provided answers and solutions for my small inheritance. You have given me lots to consider. Probate isn't for another month so I have time to investigate my suggested options.
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