If you are a married couple with a prenuptial agreement, and your spouse is placed in a nursing home, will the prenuptial agreement protect your individual assets? The short answer is no. Let us take a look at why a prenuptial agreement does not matter to Medicaid planning.
In the event that your spouse is placed in a nursing home, there may be a couple of options for covering the cost of care. These include paying out of pocket for the nursing home, having long-term care insurance to cover the cost of the nursing home, or obtaining Medicaid coverage, which will cover the cost of a nursing home. Incidentally, Medicare only covers a short term stay in a nursing home.
For most American couples, paying out of pocket for the nursing home may not be a financial option and, even if it is, the excessive cost of a nursing home may not make it a wise financial decision. Additionally, unless long-term care insurance was procured during the earlier years of a person’s life, the chances of qualifying for a long-term care insurance policy in the senior years can drastically decrease. This can leave qualifying for Medicaid coverage as the primary option for covering nursing home care.
A person must apply for Medicaid coverage. The application process includes the state reviewing the applicant’s and his or her spouse’s assets to determine eligibility. Even when there is a prenuptial agreement in place, the state still considers the assets of both spouses to be a marital asset. While there have been instances where the non-institutionalized spouse with a prenuptial agreement in place successfully challenged the state’s position that they could consider both spouses assets in terms of eligibility, it is a risky proposition, which can lead to the nursing home receiving a judgment against the assets a spouse believes is protected by the prenuptial agreement.
There may be other viable legal planning strategies, beyond the prenuptial agreement,which can protect the non-institutionalized spouse’s assets. The creation of an irrevocable trust may be one of the strongest options, as it allows the couple to continue to derive the benefit of their assets. Additionally, it should be mentioned that there may still be many benefits to a prenuptial agreement, especially for couples marrying later in life, or entering into a second marriage where they have adult children, who they intend to leave their assets to.
For assistance with estate planning and long-term care planning strategies, our office is available to help you and your loved ones navigate these important issues. Please contact us today to schedule a meeting.