I'm especially concerned about my home, which is solely in my name and will be paid off in a few years. If we were married and my husband needed long-term nursing home care, would my home be an asset that might be lost? I seem to remember when my grandmother went into a nursing home in her final years, they required that her home be surrendered as payment. We have agreed that my home will eventually go to my children. I don't want to risk losing it.
A: I can give you some pointers, but you and your partner should to consult a lawyer about the specifics of your situation. Look for an estate lawyer who knows elder law, and is therefore familiar with your state's rules about nursing home care.
Here's my earlier post about how to find an estate lawyer.
You don't just need legal advice on how to protect your house in the event that either of you needs long-term care. You also need to put your agreement that your kids will ultimately inherit the house in writing -- not because you distrust your partner, but because state law will supercede your agreement unless it's in a legal contract.
Your marriage is a unique relationship that you create together. But it's also a legal partnership with rights and obligations regulated by the government.
By federal law, your spouse is legally entitled to be the beneficiary of your employer-sponsored retirement plans, for example. State laws require that you leave a certain percentage of your assets – typically at least one-third – to your spouse. As a married couple, you also have the option to file a joint income tax return, which may substantially reduce your total tax bill. You’re automatically entitled to be each other’s dependents for health insurance and other employee benefits. And you’re automatically entitled to Medicare, and to Social Security spousal and survivor benefits based on each other’s work records. These marital rights can all add up to a very pretty penny!
But of course the one-size-fits-all marital inheritance rights don't fit every family -- and you don't have to accept them. You can sign a prenuptial or postnuptial agreement -- a contract in which both of you agree to waive your legal entitlements, and create a plan that’s more appropriate to your situation.
Naturally, prenuptial contracts are particularly important for people who want to safeguard some of their assets for their children by a previous marriage.
A good prenuptial or postnuptial agreement protects your spouse as well as your kids. In your case, for example, your agreement could say that your children will inherit your house when you die, but that your husband will have the right to continue living there for his lifetime if he survives you. (If so, the agreement should also spell out who will be responsible for the cost of maintenance and capital improvements to the house while your surviving spouse lives there.)
A prenuptial and/or postnuptial agreement allows both of you to leave your solely-owned assets to anyone you wish. But it won't protect those assets from legitimate third party claims -- and these include claims from your spouse's medical providers. By state law, spouses are responsible for paying for each other's food, clothing, shelter and medical care.
An attorney familiar with your state's laws can tell you if there are legal steps you can take to protect your house from potential future claims. (One way might be to put your children on the deed now, for example.)
From what you say about your grandmother, it sounds as if Medicaid paid for her nursing home care. Medicaid is a joint federal and state program that provides medical and long-term care based on financial need. (Don’t confuse it with Medicare. Medicare is a federal program whose benefits are not based on financial need; it provides medical coverage, but doesn’t cover long-term care.)Although Medicaid rules are state-specific, in general you must spend most of your assets before you can qualify for nursing home benefits. Your house is an exception, however. Even if you are receiving Medicaid nursing home benefits, in most states your house cannot be sold to pay for your care as long as you affirm your intention to return there. And even after your death, Medicaid cannot enforce a lien against your house to recoup benefits that it paid for your care as long as your spouse still lives there.
Please send your questions to Lynn@LynnBrennersFamilyFinance.com. I'm sorry I can't respond personally to every email. Questions are only addressed online.(c) Lynn Brenner, All Rights Reserved