Till Death Do Us Part?
BY BERNARD A. KROOKS, ESQ.
I met with a client (Andy) last month whose wife (Mary) is very ill. She will likely spend the rest of her life in a nursing home at a cost of more than $20,000 a month. Andy and Mary, unfortunately, had not done any advance planning and were totally devastated by her diagnosis of early-onset Alzheimer’s Disease. Andy, a relatively young 68 years old was very concerned about how he and Mary would be able to pay for the catastrophic cost of her care and how Andy would be able to afford to continue to live in the family home in Westchester for the remainder of his life. After reviewing some estate planning decisions which needed to be made, Andy sheepishly asked whether divorce is a viable strategy for securing government assistance to help pay for some or all of Mary’s nursing home costs.
Andy and Mary have been married for 43 years and Andy told me that he and Mary each take their wedding vows very seriously; however, Andy was a fairly successful businessman over the years, and he wanted to explore all options. Thus, the topic of divorce.
Before we talk about whether divorce would be of any benefit to Andy and Mary in their situation, let’s review some basics. The United States does not have a health insurance system for long-term care. If you have a chronic illness such as Alzheimer’s, Parkinson’s, or ALS (Lou Gehrig’s Disease) then Medicare does not cover the cost of your long-term are. Some folks are able to get Medicare coverage for short-term rehabilitative care in a hospital or nursing home setting, but that type of subsidized care is time and cost limited. It will not pay for the long-term nursing home costs of Mary or anyone else.
Medicaid is the only government program that will cover the costs of long-term care. However, in order to qualify, you must meet Medicaid’s strict income and asset requirements. Moreover, if you are married, then you are legally responsible for the long-term care costs of your spouse. When one spouse needs nursing home care, the government counts not only the assets of the sick spouse, but also the assets of the well spouse for purposes of determining whether you meet their asset and income requirements. Thus, moving all the assets into the name of the well spouse won’t, on its own, solve the problem since the assets of both spouses are counted in the Medicaid determination. So that raises the question asked by Andy, if I’m about to put my spouse into a nursing home setting, is divorce a strategy to make her eligible for benefits, saving assets for my own future needs?
Putting aside the emotional issue of getting divorced so that you don’t have to pay for a spouse’s care, there are other problems with this approach. For example, the divorce court, if a divorce is granted, will require an equitable distribution of your marital assets. Thus, some (approximately half, depending on the circumstances) of your marital assets would go to the sick spouse and be spent on the cost of her care. The good news is that the other half would go to the well spouse and not have to be used to pay for the sick, (now former) spouse’s care. If your spouse is incapacitated, like Mary, then the court will appoint someone to look after their interests in the divorce proceedings.
After discussing the foregoing, Andy asked whether he and Mary can enter into an agreement to divide assets as they wish. Some couples will enter into such agreements prior to getting married and others will do so while they are married. However, in Andy’s case, Mary may not have the capacity to enter into such an agreement due to her condition. In any event, while these types of agreements, if properly done, are generally binding on the couple, they are not binding on the government or Medicaid since they were not a party to the agreement. Thus, a marital agreement with respect to the distribution of marital assets in the event of a divorce is unlikely to protect the marital assets from the costs of long-term care.
A better strategy would be to plan in advance. There are many legal strategies available, including the use of trusts that could have helped in Andy and Mary’s situation. Unfortunately, many of these strategies are not effective if done while you or your spouse is on the nursing home doorstep. In addition, the rules are very complicated, and you would be well-served by seeking the advice and counsel of a Certified Elder Law Attorney prior to making any decisions.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP. He was named 2021 “Lawyer of the Year” by Best Lawyers in America® for excellence in Elder Law and has been honored as one of the “Best Lawyers” in America since 2008. He was elected to the Estate Planning Hall of Fame by the National Association of Estate Planners & Councils (NAEPC). Krooks is past Chair of the Elder Law Committee of the American College of Trust and Estate Counsel (ACTEC). Mr. Krooks may be reached at (914-684-2100) or by visiting the firm’s website at www.littmankrooks.com.