Dear Mr. Premack: My wife and I own our home and have savings of about $360,000. She has long-term care insurance. I am 7 years older and cannot qualify for the insurance due to health troubles. Should I need long term care, I don’t want her to lose everything. I’ve read that if I were to make her the sole owner of all financial assets by getting a divorce, I could qualify for Medicaid, and she would have all the assets. Is a divorce our best bet? – PW
Divorce for Medicaid is a risky legal strategy. In Texas we have “no fault” divorce, but you must still represent to the court that the marriage “has become insupportable because of discord or conflict of personalities that… prevents any reasonable expectation of reconciliation.” Divorce in order to better support your wife certainly does not fit that definition.
Besides, Medicaid law provides an alternative called the “spousal protected resource allocation (SPRA)”. If you need nursing home care, then 1) your home is entirely protected for your spouse, and 2) at least $109,560 of your savings is protected for your spouse. The balance must be spent on your care or reallocated into protected categories, like a prepaid funeral plan, a new automobile, debt repayment or even college savings funds for your grandchildren. Depending on your monthly income, you may even be entitled to “expand” the SPRA to a higher amount.
Before you consider divorce, remember that long-term care is the rainy day for which you saved this money. Contact a qualified Elder Law attorney to investigate all your alternatives.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, April 16, 2010