Protecting an At-Home Spouse's Assets When Nursing Home Care Is Needed

The duty of spouses to financially support one another does not disappear when one of them requires the advanced care provided by a nursing home or assisted living facility. These types of facilities are very expensive, often costing thousands of dollars a month. Oftentimes people cannot afford this care on their own and rely upon federal and state Medicaid assistance. Medicaid provides comprehensive medical assistance, but it is needs based - the couple cannot have too many assets to be able to qualify. Since Medicaid examines the assets of the couple as a whole, making the cut-off for eligibility can leave one spouse indigent.

Luckily, there are ways to protect at least a portion of the at-home spouse's income and wealth. There in no simple, boilerplate way to do it, however. You need the assistance of an experienced elder law attorney or certified financial planner to make sure that any action you take is legal, in your best interests and allows you to provide the best possible care to your ailing spouse.

Attorney Craig Reaves, former president of the National Academy of Elder Law Attorneys, suggests three possible courses of action to address this difficult situation:

  • Avoiding Medicaid funding altogether - changing the couple's investments, tapping into a retirement fund, taking on additional work or relying on the financial support of fellow family members could provide enough funding for a nursing home with careful management
  • Taking advantage of a legal work-around designed to prevent the at-home spouse from becoming impoverished - exemptions in the Medicaid eligibility system allow nearly $110,000 in marital property from being considered
  • Divorcing - while this option is unfavorable, it is becoming more common; a faltering economy has encouraged many couples to take this route to keep funds available for the at-home spouse, children and other family members

Learn More About Your Options

Avoiding Medicaid funding is preferred by many couples. This method is designed to fund nursing home care by income alone, using salary, family or bank loans, gifts or other sources. Should income be insufficient, however, other funds must be made available, be that through spending down retirement funds, or by selling stocks, bonds or even the family home.

The "anti-poverty" exemption can keep some assets sheltered from being counted for Medicaid eligibility purposes, however. A couple seeking and qualifying for this exemption can typically keep their home, vehicle, personal items, burial plots and half of remaining property subject to a current maximum of approximately $110,000. Some states automatically provide this exemption, while others require documentation of the value of assets the at-home spouse wishes to retain.

Divorce could also be an option. Financial planning through divorce is complicated and can be difficult logistically and emotionally. It does, however, sever the duty of spousal support, allowing the spouse in need of care to qualify for government assistance while still keeping assets available for the at-home spouse.

What Steps Should You Take Now?

If you are already pondering the funding of nursing home care for a loved one, you should seek the advice of an experienced estate-planning attorney in your area to learn more about your rights and legal options. If you are worried about the future possibility of care, however, careful estate planning now may allow you to preserve assets for your spouse and for future generations while not jeopardizing your eligibility for government benefits.

To maximize your chances of successfully protecting assets in the event of future long-term nursing home care, you should create a comprehensive estate plan and revisit it whenever you have a substantial change in your life (like marriage, birth/adoption of a child or the death of a loved one).