I am not taking a stand for or against it, but there are implications of it that many people do not take into account, especially for when it’s done later in life. Actually, I’m in favor of it. It is comforting to know that there is a special someone who wants to be with you forever, or until death do you part.
However, it’s the “in sickness or in health” part that can cause financial difficulty. Once you sign that marriage license, you are committed. It’s not like a hunting or fishing license, where once purchased you can start looking. Once you sign, you are legally responsible, for each other and finances. If your new spouse has a stroke doing the chicken dance at the reception (ok, I’m from the midwest), and ends up paralysed on the left side, guess who will be paying for the long term care that person needs?
Unfortunately, prenuptial contracts are not honored by Medicaid. Thus if you have one and consider your finances well protected, they are not. Your money is now “our” money and must be spent for care. If the two of you do not have the available cash flow to pay for the needed long term nursing care, you will spend down assets until you become elligible for Medicaid.
Medicaid is a government program that will pay for care once you are “impoverished”. There are spousal impoverishment protections so that the well “at home” spouse has money, food, and fuel. Generally the “at home” spouse can retain the house, with a lien building up against it. They can keep half of the available nest egg, but only a maximum of $115,920. Thus if your nest egg is $600,000, the half you must spend before Medicaid will help is $484,080. The one needing care can keep an additional $2000.
The spouse in a nursing facility must get all assets out of his/her name during the first year on Medicaid. Thus if you came into the marriage with the house, and end up needing care, it must be put in the other spouse’s name. Who will it pass on to after the last death? Possibly to someone who was not the originally intended recipient.
So, is it better to simply live together? You sell your house and move in with the new love of your life. That person needs long term care and must spend all assets, including the house solely owned, down to $2000. Where do you live now?
This is why well advised people contemplating a second marriage will often show up in my office to investigate long term care insurance. It is far better to let the interest on part of the nest egg pay the premiums, so the insurance pays for care, than to end up broke, and unhappy. Just be sure to do this before you sign that marriage license. Do it now, while healthy, for your sake and the other person’s as well. It will even make you a more desirable prospect. Call Romeo Raabe, TheLongTermCareGuy.com at (800) 219-9203 or (920) 884-3030 to schedule a meeting.