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Prenuptial agreements and long term care asset exposure
Old 10-15-2012, 05:39 PM   #1
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Prenuptial agreements and long term care asset exposure

Friend is 80 and in 2nd marriage to a lady (she was married previously also). They have a prenuptial agreement (I've not seen) where all their assets are separate. She has house in her name. Each has their own investments in their individual names with their kids from previous marriages as beneficiaries.

Question: If wife goes into nursing home, her assets would be first be used on care. Once her assets were exhausted, would she then qualify for Medicare ?

Or, would the husband's separate assets be required to be used next ?

Since "they have a prenup", they think everything is separate and Medicaid decisions would be based on each individually.

But as they are legally married, can assets be held separately ?
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Old 10-15-2012, 05:50 PM   #2
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I'm not a lawyer, but even with a prenup and separate assets, I would think Medicaid would require spouses assets to be used before assistance kicks in.

Legally, there are some good things and bad things about being married, versus not being married. But IMO, the bad outweigh the good from a financial standpoint.
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Old 10-15-2012, 06:25 PM   #3
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Good question. I'm not a lawyer either. Logic tells me that pre nups and post nups are written specifically in the event there is a legal separation or divorce and probably don't have a chance of being considered in the situation you outlined. That said maybe an attorney will come by and let us all know the answer from a legal perspective.
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Old 10-15-2012, 06:59 PM   #4
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When I looked into this, it seemed very clear that there's no such thing as 'separate assets' when it comes to Medicaid eligibility.

In fact there was an article in the NYT a while back about how some couples divorce to get around this problem.

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Old 10-15-2012, 08:33 PM   #5
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Pre-nups will not help. There is a look-back rule of 5 years, but, that doesn't apply if you "divorce." Any shared assets would of course get split up, and you would have to be careful of making sure there aren't any transfers that look like gifts. The biggest thing you would need to watch for is probably alimony in this situation. Probably some other issues.

Medicaid Rules Governing Divorce | eHow.com
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Old 10-15-2012, 08:39 PM   #6
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Quote:
Originally Posted by Delawaredave5 View Post
Question: If wife goes into nursing home, her assets would be first be used on care. Once her assets were exhausted, would she then qualify for Medicare ?
Or, would the husband's separate assets be required to be used next ?
Since "they have a prenup", they think everything is separate and Medicaid decisions would be based on each individually.
But as they are legally married, can assets be held separately ?
Medicaid funds come from the federal govt but are managed by the individual states, so there are at least 50 different rulebooks.

It might be possible to find guidelines on your state's website. But they (and you) need a lawyer to make sure you have credible answers to the question.
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Old 10-15-2012, 10:23 PM   #7
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Originally Posted by plex View Post
Pre-nups will not help. There is a look-back rule of 5 years, but, that doesn't apply if you "divorce." Any shared assets would of course get split up, and you would have to be careful of making sure there aren't any transfers that look like gifts. The biggest thing you would need to watch for is probably alimony in this situation. Probably some other issues.

Medicaid Rules Governing Divorce | eHow.com
A quote from the above link:

"Marital status can play a significant role for Medicaid recipients when finances are considered. For example, even if a couple has a prenuptial agreement or marital contract protecting finances, both income and assets from spouses is considered. If a spouse applies for Medicaid coverage, the U.S. Department of Health and Human Services rules stipulate that all income and assets, including those excluded from a prenuptial agreement, must be evaluated. Couples with substantial combined incomes and assets may be denied services. In recent years, older couples have considered divorce as an option to obtain coverage and Medicaid services."

The way I read this is if you are married and if you have a pre-nup all incomes and assets are included but those items defined in a pre-nup are not included. Only those items "excluded" from a prenup are included. ?
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Old 10-15-2012, 10:30 PM   #8
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But as they are legally married, can assets be held separately ?
In general, yes they can be held separately but it depends on how the assets are titled as to whether they are legally separate or not.
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Old 10-16-2012, 07:31 AM   #9
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Quote:
Originally Posted by sheehs1 View Post
A quote from the above link:

"the U.S. Department of Health and Human Services rules stipulate that all income and assets, including those excluded from a prenuptial agreement, must be evaluated. "

The way I read this is if you are married and if you have a pre-nup all incomes and assets are included but those items defined in a pre-nup are not included. Only those items "excluded" from a prenup are included. ?
Just guessing, but I bet if you read the entire section carefully you would reach an opposite conclusion. I.e., that phrase about "excluded" means that assets that would otherwise be "excluded" from being considered joint because of a prenup are still evaluated for Medicaid eligibility.
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Old 10-16-2012, 09:01 AM   #10
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Originally Posted by Packman View Post
Legally, there are some good things and bad things about being married, versus not being married. But IMO, the bad outweigh the good from a financial standpoint.
Fixed that for you!
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Old 10-16-2012, 09:06 AM   #11
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Fixed that for you!
Quote:
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there are some good things and bad things about being married, versus not being married.
Even better
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Old 10-16-2012, 12:46 PM   #12
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As Nords said, you should consult a lawyer as the rules vary from state-to-state, but I think it is most likely that Medicaid eligibility will be looked at as if the pre-nup didn't exist (to all assets owned by the couple irrespective of ownership title).

Since some states are now going after kids for parent NH care, I really doubt they would let a little pre-nup get in the way.
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Old 10-17-2012, 05:45 PM   #13
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These are important questions. Although I have much respect for many posters here, I would consult a lawyer first.

Quote:
Originally Posted by Delawaredave5 View Post
Since "they have a prenup", they think everything is separate and Medicaid decisions would be based on each individually.

But as they are legally married, can assets be held separately ?
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Old 10-17-2012, 05:56 PM   #14
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Thanks for all comments. They will be seeing a lawyer. Does appear Medicaid looks at both married spouse's assets and those have to be exhausted first before Medicaid kicks in.

Ask an Elder Care Attorney: Late-Life Marriage Issues - NYTimes.com

http://scholarship.law.marquette.edu...context=elders
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