Strategic Divorce - nursing home funds

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SavinMaven
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Strategic Divorce - nursing home funds

Post by SavinMaven »

I found prior threads on divorcing for tax purposes, but am wondering if there is any advantage to a divorce to help us afford a nursing home. Maybe it's a given, but I do want to state up front we're not looking to do anything fraudulent, but we find ourselves in potentially a tough spot and want to do the best we can to plan ahead.

Both my spouse and I are in our early 40s. We learned this year he has a serious illness that will progress. Average lifespan is 9-12 years from diagnosis, but loss of physical independence could occur in half that time. For now, we are both working full time, and he wants to continue to work as long as he can. I make about 2/3 of our household income and can easily cover all current expenses without his salary. We have a teenager and a preteen. I have long-term care insurance through work, but he does not (and my policy does not cover him). We have term life insurance, but there is no option to receive a portion of it while alive to pay for needs. We were financially on track to FIRE by our early-to-mid 50s, but that was assuming our current rate of accumulation continued until then, which now seems unlikely.

I am still really reeling from this and maybe not thinking clearly - he currently looks healthy and feels fine, just his test results are very abnormal so it's kind of hard to wrap your head around. I fear what will happen if he needs 24/7 care before we can afford for me to stop working too to take care of him. If we were to divorce on paper, when he has to stop working, would his lack of income then qualify him for assistance?
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Taylor Larimore
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Re: Strategic Divorce - nursing home funds

Post by Taylor Larimore »

SavinMaven:

I am not qualified to give you an answer. Nevertheless, I wish you and your husband the best outcome possible.

Taylor
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Last edited by Taylor Larimore on Sat Oct 23, 2021 10:28 am, edited 1 time in total.
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ResearchMed
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Re: Strategic Divorce - nursing home funds

Post by ResearchMed »

SavinMaven wrote: Sat Oct 23, 2021 10:16 am I found prior threads on divorcing for tax purposes, but am wondering if there is any advantage to a divorce to help us afford a nursing home. Maybe it's a given, but I do want to state up front we're not looking to do anything fraudulent, but we find ourselves in potentially a tough spot and want to do the best we can to plan ahead.

Both my spouse and I are in our early 40s. We learned this year he has a serious illness that will progress. Average lifespan is 9-12 years from diagnosis, but loss of physical independence could occur in half that time. For now, we are both working full time, and he wants to continue to work as long as he can. I make about 2/3 of our household income and can easily cover all current expenses without his salary. We have a teenager and a preteen. I have long-term care insurance through work, but he does not (and my policy does not cover him). We have term life insurance, but there is no option to receive a portion of it while alive to pay for needs. We were financially on track to FIRE by our early-to-mid 50s, but that was assuming our current rate of accumulation continued until then, which now seems unlikely.

I am still really reeling from this and maybe not thinking clearly - he currently looks healthy and feels fine, just his test results are very abnormal so it's kind of hard to wrap your head around. I fear what will happen if he needs 24/7 care before we can afford for me to stop working too to take care of him. If we were to divorce on paper, when he has to stop working, would his lack of income then qualify him for assistance?
Very sorry about your husband's health news.

Strategic divorce might be seen as somewhat sketchy, legally.

However you have advance notice, so you should see someone like an elder-care attorney.
IF you separate funds (perhaps into trusts, but I am NOT any expert here about how to do it), then anything done more than 5 years prior to needing Medicaid won't count against the patient.

Look into it that way.
And then you can remain married :happy which does give you other rights and may make it easier to help him in the future.

And make SURE that all wills, health care proxies, powers of attorney, directives, etc., are signed while he (you, too, btw - one never knows... as you now do know...!) is still legally able to sign documents.

Best wishes to all of you.

RM
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cheese_breath
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Re: Strategic Divorce - nursing home funds

Post by cheese_breath »

I don't know, but I suspect you'd need to get awarded all the property in the divorce if this could be done. I think you need to consult with estate planning / elder law professionals familiar with your state's laws. And don't wait until the last minute to do it.
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THY4373
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Re: Strategic Divorce - nursing home funds

Post by THY4373 »

I am very sorry for your husband's diagnosis. As others have suggested you need to speak to one or more lawyers. Also keep in mind that public assistance type care (e.g., Medicare) are not going to be top of the line most of the time. I clearly don't know all the circumstances but something to keep in mind if this will make a difference or not in his care and prognosis.
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Re: Strategic Divorce - nursing home funds

Post by littlebird »

If he qualified for “assistance”, it would be Medicaid, or your state’s equivalent. He’d be in a facility that takes Medicaid reimbursement. Google “Medicare/Medicaid nursing homes” in your area and go look at a couple of them. Then you’ll have a basis for your decisions.

My recommendation would be to talk to the social worker at your local hospital or social services agency and ask if there’s something like assisted living group homes or home based assisted living in your area. Depending on his future needs, this may be a more affordable and far more positive alternative.
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Re: Strategic Divorce - nursing home funds

Post by littlebird »

THY4373 wrote: Sat Oct 23, 2021 10:41 am I am very sorry for your husband's diagnosis. As others have suggested you need to speak to one or more lawyers. Also keep in mind that public assistance type care (e.g., Medicare) are not going to be top of the line most of the time. I clearly don't know all the circumstances but something to keep in mind if this will make a difference or not in his care and prognosis.
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tibbitts
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Re: Strategic Divorce - nursing home funds

Post by tibbitts »

littlebird wrote: Sat Oct 23, 2021 10:52 am If he qualified for “assistance”, it would be Medicaid, or your state’s equivalent. He’d be in a facility that takes Medicaid reimbursement. Google “Medicare/Medicaid nursing homes” in your area and go look at a couple of them. Then you’ll have a basis for your decisions.

My recommendation would be to talk to the social worker at your local hospital or social services agency and ask if there’s something like assisted living group homes or home based assisted living in your area. Depending on his future needs, this may be a more affordable and far more positive alternative.
It might be a little early to shop for care, since a lot can change in the six years or so before he might be expected to need care. However it would be good to see an attorney immediately; and probably more than one for a second opinion. Also some not-strictly-Medicaid facilities might accept Medicaid after an initial period of being paid at their usual rate.
5outof10
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Re: Strategic Divorce - nursing home funds

Post by 5outof10 »

I am an estate/elder planning lawyer. Go talk to one in you state. Now.

Your options diminish drastically with time.

Many quality lawyers will do the first consultation for free or reduced rates. Don't call to rate shop, call to ask experience (250+ similar files) and free initial consultation. (You can rate shop too, I guess, but the better attorneys tend to shy away from quotes because they know what you tell them over the phone isn't the full story so they want to take a full x-ray of the situation during the first appointment before setting client expectations that the lawyer than needs to meet).

Many strategies purveyed on the web, including this forum sometimes, are coffee shop talk and potentially illegal.

You need an experienced elder attorney that is licensed to practice law in your state. You state bar association may know good referrals.

Ps. I hate lawyers more than the average person, but this, in my humble opinion, is not a time to DIY.
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Re: Strategic Divorce - nursing home funds

Post by hppycamper »

ResearchMed wrote: Sat Oct 23, 2021 10:28 am
SavinMaven wrote: Sat Oct 23, 2021 10:16 am I found prior threads on divorcing for tax purposes, but am wondering if there is any advantage to a divorce to help us afford a nursing home. Maybe it's a given, but I do want to state up front we're not looking to do anything fraudulent, but we find ourselves in potentially a tough spot and want to do the best we can to plan ahead.

Both my spouse and I are in our early 40s. We learned this year he has a serious illness that will progress. Average lifespan is 9-12 years from diagnosis, but loss of physical independence could occur in half that time. For now, we are both working full time, and he wants to continue to work as long as he can. I make about 2/3 of our household income and can easily cover all current expenses without his salary. We have a teenager and a preteen. I have long-term care insurance through work, but he does not (and my policy does not cover him). We have term life insurance, but there is no option to receive a portion of it while alive to pay for needs. We were financially on track to FIRE by our early-to-mid 50s, but that was assuming our current rate of accumulation continued until then, which now seems unlikely.

I am still really reeling from this and maybe not thinking clearly - he currently looks healthy and feels fine, just his test results are very abnormal so it's kind of hard to wrap your head around. I fear what will happen if he needs 24/7 care before we can afford for me to stop working too to take care of him. If we were to divorce on paper, when he has to stop working, would his lack of income then qualify him for assistance?
Very sorry about your husband's health news.

Strategic divorce might be seen as somewhat sketchy, legally.

However you have advance notice, so you should see someone like an elder-care attorney.
IF you separate funds (perhaps into trusts, but I am NOT any expert here about how to do it), then anything done more than 5 years prior to needing Medicaid won't count against the patient.

Look into it that way.
And then you can remain married :happy which does give you other rights and may make it easier to help him in the future.

And make SURE that all wills, health care proxies, powers of attorney, directives, etc., are signed while he (you, too, btw - one never knows... as you now do know...!) is still legally able to sign documents.

Best wishes to all of you.

RM
+1

Depending on your state/location, higher-end nursing homes may be required to fill x% beds with residents on Medicaid. They usually have multi-year wait lists. However, many such nursing homes have much shorter wait lists for those who can pay out of pocket or through LTC insurance. They may also allow non-medicaid residents to continue to stay after the residents exhaust their own funds and transition to Medicaid. These residents will fill the required Medicaid quota first.

Local elder care attorneys should be knowledgeable on these details. I'd suggest carefully interviewing elder care attorneys to make sure they do have the knowledge and experience.
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Re: Strategic Divorce - nursing home funds

Post by Kenkat »

cchrissyy wrote: Sat Oct 23, 2021 11:58 am i'm so sorry!

if you haven't thought of this yet, log in to his social security account and see what monthly disability payment he qualifies for, as well as what the death benefit would be for you and the kids, if either one is a minor at the time.
+1

He should be able to collect social security disability while alive and unable to work. After two years he will qualify for Medicare as well. Any children under 18 can also receive a benefit under his work record and you can as well if caring for any children you share under age 16. There is a family maximum benefit but this can still be a valuable benefit.

https://www.ssa.gov/benefits/disability/family.html

I am sorry that this news has hit your family. One day at a time; doctors will give you timeframes but there are new treatments always being developed and no one (here on earth at least) knows the true prognosis.
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Re: Strategic Divorce - nursing home funds

Post by littlebird »

tibbitts wrote: Sat Oct 23, 2021 11:10 am
littlebird wrote: Sat Oct 23, 2021 10:52 am If he qualified for “assistance”, it would be Medicaid, or your state’s equivalent. He’d be in a facility that takes Medicaid reimbursement. Google “Medicare/Medicaid nursing homes” in your area and go look at a couple of them. Then you’ll have a basis for your decisions.

My recommendation would be to talk to the social worker at your local hospital or social services agency and ask if there’s something like assisted living group homes or home based assisted living in your area. Depending on his future needs, this may be a more affordable and far more positive alternative.
It might be a little early to shop for care, since a lot can change in the six years or so before he might be expected to need care. However it would be good to see an attorney immediately; and probably more than one for a second opinion. Also some not-strictly-Medicaid facilities might accept Medicaid after an initial period of being paid at their usual rate.
She wouldn’t be shopping for care. She’d be finding out whether she wants to take drastic, expensive steps to put her spouse in a Medicaid facility, or whether there are possible alternatives that would be within their means and obviate the need for taking such drastic steps. I would do this before exposing myself to a Medicaid-qualifying attorney. I speak as a lawyer and caregiver, then widow, of a Parkinson’s patient
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Re: Strategic Divorce - nursing home funds

Post by HomeStretch »

+1 to the advice to see an elder care attorney soon for advice on how best to financially position your family.

Medicaid long-term care benefits for in-home or in-facility care are state specific. With advance planning and without divorcing, you can likely set up your/spouse’s financial affairs to give your spouse quality care while preventing you as the “well spouse” and your dependent children from becoming impoverished due to the high expense of in-home or in-facility long-term care.

Regardless of your net worth or income level, planning for the likely cost of your spouse’s care makes sense. The cost of care varies by area and can be astonishingly high. In my limited experience, initial caretaking for mild assistance needs is often provided in-home by family. That may progress to in-home care with assistance (aides)/medical equipment or in-facility care for more severe needs. While you are a high earner now, the time you spend on future caretaking of your spouse could diminish or eliminate your W-2 earnings.

In my state, the Medicaid long-term care benefit determination excludes gifts between spouses and certain assets such as one vehicle from the 5-year look-back period. So you may get advice from your attorney to have your jointly-held accounts, properties and vehicles re-titled in just your name, and to have your spouse not be the beneficiary of individual accounts/assets named in your will or TOD/PODs. If your state has a spousal elective share, your spouse’s elective share or more of your estate can be left in trust to provide care above what Medicaid long-term care will provide.

Investigate care providers and facilities well in advance for quality, cost and whether they accept Medicaid initially or after a period of private pay. Not all facilities accept Medicaid but many will accept it after a period of private pay. Care facilities have long admission waits (years in some cases) for Medicaid patients but private pay enables you to move up for more immediate admission. Facilities that accept Medicaid on Day 1 in my area are not the best facilities. So it can be important to preserve funds for private pay to be admitted to a higher quality facility.

In my parent’s case, one parent is private paying $240k for one year at a skilled nursing facility (SNF) after which the spouse will move to Medicaid’s long-term care benefits (accepted by the facility). Without private pay, the wait for admission as a Medicaid patient on day 1 was 3-4 years. The move to Medicaid is a financial necessity to leave the younger well parent with the condo they live in and $130k in assets to live on along with SS income of $23k/year in a HCOL area. The amount Medicaid will leave the well parent is not enough for their care at home or in assisted living or to buy in to a SNF for $250k, if needed. Fortunately my siblings and I are able to financially support the well parent but it wasn’t a scenario any of us had imagined in our retirement planning.
Last edited by HomeStretch on Sun Oct 24, 2021 10:25 am, edited 3 times in total.
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Re: Strategic Divorce - nursing home funds

Post by delamer »

All the best to you and your family going forward.

We have a neighbor who was severely disabled in an auto accident and is unable to work. Her minor children live with her and she has a health care aid.

Apparently, she and her husbsnd divorced in order to provide her with government benefits that she woukd not be eligible for with his income if they had stayed married.

Her husband lives in the community also, and their children go back and forth between their parents’ homes.

Please find an attorney who can help you plan.
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Re: Strategic Divorce - nursing home funds

Post by tibbitts »

littlebird wrote: Sat Oct 23, 2021 12:49 pm
tibbitts wrote: Sat Oct 23, 2021 11:10 am
littlebird wrote: Sat Oct 23, 2021 10:52 am If he qualified for “assistance”, it would be Medicaid, or your state’s equivalent. He’d be in a facility that takes Medicaid reimbursement. Google “Medicare/Medicaid nursing homes” in your area and go look at a couple of them. Then you’ll have a basis for your decisions.

My recommendation would be to talk to the social worker at your local hospital or social services agency and ask if there’s something like assisted living group homes or home based assisted living in your area. Depending on his future needs, this may be a more affordable and far more positive alternative.
It might be a little early to shop for care, since a lot can change in the six years or so before he might be expected to need care. However it would be good to see an attorney immediately; and probably more than one for a second opinion. Also some not-strictly-Medicaid facilities might accept Medicaid after an initial period of being paid at their usual rate.
She wouldn’t be shopping for care. She’d be finding out whether she wants to take drastic, expensive steps to put her spouse in a Medicaid facility, or whether there are possible alternatives that would be within their means and obviate the need for taking such drastic steps. I would do this before exposing myself to a Medicaid-qualifying attorney. I speak as a lawyer and caregiver, then widow, of a Parkinson’s patient
I'm just saying that when I looked at these facilities, ownership, policy, one takeaway was that pricing changes over six years (much less from what I saw) could completely change the situation in a given location. I think most people, at least in an elder care situation that I'm familiar with, try for a facility that will allow staying if private-pay money runs out, or the monthly income becomes no longer sufficient to fully pay for the facility. I have relatives who were in such facilities and while not exactly luxury resorts, I believe they received reasonable care. Maybe the rules would be different for someone younger, but maybe not, or maybe it would depend on the diagnosis.
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Re: Strategic Divorce - nursing home funds

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SavinMaven
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Re: Strategic Divorce - nursing home funds

Post by SavinMaven »

[quoted post and response removed by admin LadyGeek]

I would love to care for him myself. But we could still have minor children living at home at the point he is no longer independent, and someone has to pay the mortgage. It is horrible for him to think of us facing a potentially difficult future without him, and the last thing he wants is for his care to leave us impoverished. We are just trying to be as prepared as we can for the hand we're going to be dealt.
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Re: Strategic Divorce - nursing home funds

Post by LadyGeek »

SavinMaven - From someone who's been a widow for over a year and went through a similar situation (different illness and age, but the result was the same), please heed the advice of the members who are suggesting you contact an attorney experienced in your state.

The very first thing you should do is get Power of Attorney so you can legally manage his affairs before things start going off-track. You also need an advanced health care directive (living will) and Will. An attorney will guide you.

Start a list of things you need to do and keep good notes. It's tough to think about, but necessary.

Doing all of this will take time and I would also suggest getting assistance from trusted family members.
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littlebird
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Re: Strategic Divorce - nursing home funds

Post by littlebird »

tibbitts wrote: Sat Oct 23, 2021 2:38 pm
littlebird wrote: Sat Oct 23, 2021 12:49 pm
tibbitts wrote: Sat Oct 23, 2021 11:10 am
littlebird wrote: Sat Oct 23, 2021 10:52 am If he qualified for “assistance”, it would be Medicaid, or your state’s equivalent. He’d be in a facility that takes Medicaid reimbursement. Google “Medicare/Medicaid nursing homes” in your area and go look at a couple of them. Then you’ll have a basis for your decisions.

My recommendation would be to talk to the social worker at your local hospital or social services agency and ask if there’s something like assisted living group homes or home based assisted living in your area. Depending on his future needs, this may be a more affordable and far more positive alternative.
It might be a little early to shop for care, since a lot can change in the six years or so before he might be expected to need care. However it would be good to see an attorney immediately; and probably more than one for a second opinion. Also some not-strictly-Medicaid facilities might accept Medicaid after an initial period of being paid at their usual rate.
She wouldn’t be shopping for care. She’d be finding out whether she wants to take drastic, expensive steps to put her spouse in a Medicaid facility, or whether there are possible alternatives that would be within their means and obviate the need for taking such drastic steps. I would do this before exposing myself to a Medicaid-qualifying attorney. I speak as a lawyer and caregiver, then widow, of a Parkinson’s patient
I'm just saying that when I looked at these facilities, ownership, policy, one takeaway was that pricing changes over six years (much less from what I saw) could completely change the situation in a given location. I think most people, at least in an elder care situation that I'm familiar with, try for a facility that will allow staying if private-pay money runs out, or the monthly income becomes no longer sufficient to fully pay for the facility. I have relatives who were in such facilities and while not exactly luxury resorts, I believe they received reasonable care. Maybe the rules would be different for someone younger, but maybe not, or maybe it would depend on the diagnosis.
My point was that she might not want him in a Medicaid nursing home at all, ever, let alone taking drastic action to place him there. I guess I’m losing my ability to make a point subtly. This must be how the downhill slide starts. :annoyed
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Re: Strategic Divorce - nursing home funds

Post by ResearchMed »

HomeStretch wrote: Sat Oct 23, 2021 12:53 pm Investigate care providers and facilities well in advance for quality, cost and whether they accept Medicaid initially or after a period of private pay. Not all facilities accept Medicaid but many will accept it after a period of private pay. Care facilities have long admission waits (years in some cases) for Medicaid patients but private pay enables you to move up for more immediate admission.
I forgot to mention this in my post above.

First, to repeat, do check with an elder care attorney or other suitable professional about how to arrange things financially to prepare for this.

And do visit a few facilities, including some that include both Assisted Living (ASF) as well as Skilled Nursing (SN) in case he first only needs ALF level of care.
You'd want a place - a nice place - that will take someone who can pay privately for some predetermined time (or bank account size, etc.) and will then KEEP them at the same (or almost the same) level of care if/when they run out of money.
"Same level of care" here means the same nice facility!
It might mean a shared room instead of private, or a shared bathroom instead of a private bathroom.

MIL's facility was getting ready to help us apply for Medicaid for her as her money dwindled down after about 5 years at the ALF level before she ended up needing SN. (She aged remarkably well until the very end at age 99.)
The place near us we had moved her to had only private SN rooms. The difference with a change to Medicaid funding would have meant a shared bathroom, but we could have paid the surcharge so she could keep a private bathroom. We were going to do that (at quite a bump in cost, but it's "Mom"!), but then it was looking like she might end up bedridden. (Would a private bathroom mean much in that case?)

Visit a few places over time, have some meals, etc.
And ask the facilities about under what financial circumstances they'll accept someone AND switch them to Medicaid if needed.

One thing I am not clear about, and this probably varies. MIL had her own significant resources, so the facility could guestimate how long that might last before she ran out of money, etc.
IF we had "all the money" and were agreeing to pay for her, I don't know how they'd decide how much we'd have had to spend and how any transition to Medicaid would work. (Certainly we wouldn't agree "until WE ran out"!) I'm mentioning this just in case there might be a reason to keep a certain amount of extra money in your husband's name. Again, you'll benefit greatly from proper expert adivce and assistance about all of this.

This facility is a non-profit associated with a major medical school/teaching hospital.

RM
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Re: Strategic Divorce - nursing home funds

Post by HomeStretch »

When you meet with the attorney, be sure you also discuss a possible scenario where you predecease your spouse. Update (if not already) your/spouse’s estate documents to name guardians/trustees for minor children/their inherited assets and your backups (successors) in the event your husband becomes unable to be your executor, attorney-in-fact for your durable power-of-attorney (DPOA), your healthcare representative, etc.

As one of my retired parents spent more and more time on caretaking the other parent, I was glad that their DPOAs and healthcare representatives were in place and named me as a successor as I was able to step in at their request to take over financial and other responsibilities to lighten the load on the caretaker parent.
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Re: Strategic Divorce - nursing home funds

Post by arcticpineapplecorp. »

I'm not sure a divorce would help, unless you have all the assets right now in your name and he has little to none in his name. Then a divorce "might" protect you from having to spenddown your assets to get him care. But it is more likely you each have substantial assets in your names.

when you meet with the elder law attorney (not any attorney will do here) ask them about:

1. what you'd be able to keep as the spouse. While the amount is typically half of resources, up to a maximum amount, this does not include retirement accounts owned by you (401ks/IRAs). So those are extra resources that do not have to be spent down and are protected. His 401k/IRA will be counted as an available resource and spent down but yours are not.

2. What would your spousal maintenance allowance be if anything? If your husband gets on social security disability, it's not a given that income would go to the nursing home. Depending upon your income and your shelter costs and a dependent allowance based on the kids, you may get to keep the income (or part of) your husband might receive from SS.

3. Applying for SS disability for him could get your kids a SS benefit possibly (depending upon your income). Talk to SS or an attorney helping you navigate SS benefits about that.

4. If he's unable to work, you should apply for SS disability NOW. It can take a long time to get approved, there is generally an appeal process, you might have to get a lawyer (SS disability, not elder law) to ensure the claim gets approved and there is back pay (lump sum, out of which a lawyer would get 1/3rd back to the date of claim.

5. transfers between spouses as previously mentioned doesn't change what's countable if it was a countable resource already. Transfers to minor children may be allowed because resources of a minor child are not counted and transfers to a minor child should be exempted from gifting policies, but check on that in your state with the Elder Law Attorney. This however, also gets the resource away from you which may not be ideal if you need those resources.

6. An elder law attorney can talk to you about if medicaid compliant annuities (SPIA) for you could factor in to a plan, to spend down resources and qualify for medicaid for him and provide income for you. However, this would reduce any spousal maintenance allowance by the amount of the annuity income received and you'd lose access to the lump sum annuitized if you needed more money for an emergency than the monthly amount provides.

7. there are waiver programs to provide care in the home. Actually, this could be more favorable than medicaid for skilled care in a facility because resources could be completely excluded if you have kids under 21 in the house of an applicant/recipient of waiver services. There is an income limit, but if/when he's not working he might qualify for waiver. You'd apply through the medicaid program or your state's department of health and human services.

let us know how it goes.
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Re: Strategic Divorce - nursing home funds

Post by tibbitts »

littlebird wrote: Sat Oct 23, 2021 3:24 pm My point was that she might not want him in a Medicaid nursing home at all, ever, let alone taking drastic action to place him there. I guess I’m losing my ability to make a point subtly. This must be how the downhill slide starts. :annoyed
I understood, but you're lumping facilities that initially accept medicaid in with those that may eventually accept it after a period of private payment. I don't have experience with the former, but my experience with the latter was apparently less horrifying than yours was. You're categorizing any facility that won't kick you out if you run out of private-pay funds as a "Medicaid nursing home."
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Re: Strategic Divorce - nursing home funds

Post by HomeStretch »

OP, Medicaid and estate matters are state dependent so feedback you are receiving (mine included) may not be true for your state. An experienced attorney in your state can advise what is true for your state.

For example, in my state:
1) IRA and 401k balances for both spouses are countable by the Medicaid long term care (LTC) program as available and must be spent down prior to Medicaid eligibility for the one spouse. This is not the case in every state.
2) gifting between spouses prior to the Medicaid eligibility date does remove property (primary residence and rental property, if listed for sale) as a countable asset. If the gifting is done under a DPOA, the gifting has to be a specific DPOA power. There’s a few more nuances.
3) new programs are being piloted/added to help pay for in-home care with the goal of keeping people who need long term care in their homes and out of the more costly facilities.

So understanding how this works in your state is important - not to legally impoverish your spouse so Medicaid pays on Day 1 but rather to avoid the possibility that lengthy expensive care for 1 spouse impoverishes the well spouse and family. In my state the well spouse can keep ~$130k in assets (not half of the joint assets nor 100% of the well spouse’s individual assets) plus the primary residence up to $930k (or at least a life estate) and one vehicle. As mentioned by another poster, you and your children may be eligible for benefits, may be able to keep some or all of your husband’s income if he is on Medicaid LTC and/or Medicaid-compliant SPIAs may be an option in your case.

If your spouse is a US armed forces veteran who served active duty, your spouse (or you) may be eligible for VA Aid & Attendance or Housebound benefits plus additional healthcare services may be available through VA hospitals/medical facilities.
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Re: Strategic Divorce - nursing home funds

Post by Minty »

Best wishes to everyone in your family. I agree with the suggestion to seek counsel.

I don't recall seeing a mention of disability insurance, which even if there is no LTC insurance could be helpful. Perhaps your spouse is covered through work, and if not, open enrollment is coming up at a lot of places. Might be an opportunity to increase life insurance as well.
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Re: Strategic Divorce - nursing home funds

Post by humblecoder »

SavinMaven wrote: Sat Oct 23, 2021 3:06 pm [quoted post and response removed by admin LadyGeek]

I would love to care for him myself. But we could still have minor children living at home at the point he is no longer independent, and someone has to pay the mortgage. It is horrible for him to think of us facing a potentially difficult future without him, and the last thing he wants is for his care to leave us impoverished. We are just trying to be as prepared as we can for the hand we're going to be dealt.
SavinMaven: Thoughts and prayers for you and your family in these difficult times.

Don't let comments like this impact your thinking. You handled that comment more calmly than I would have. My family is dealing with my father who has dementia. We tried to care for him in the house for as along as we could. However, the mental and physical toll was too much, especially for my mom. We cried and cried over the decision to move him into memory care unit of a nursing home, but they were better equipped to care for him.

While I appreciate the sentiment of the person who said that they would never put their spouse in a home, they obviously are naive and have not dealt with the realities of what this type of care entails and what it means for the family. So ignore ignorant comments like that, consult with a trusted attorney, and go from there.
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Re: Strategic Divorce - nursing home funds

Post by sailaway »

Have you posed similar planning questions on forums dedicated to the medical condition at issue? Your strategies will need to be state specific, but those forums may have concrete answers.

Oh, and please try not to worry too much about those commenting on relationship issues. You have to look at what works for your family, not what strangers on the internet on a forum that discourages comments on relationship issues think is right.
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Re: Strategic Divorce - nursing home funds

Post by cheese_breath »

humblecoder wrote: Sat Oct 23, 2021 6:54 pm ... While I appreciate the sentiment of the person who said that they would never put their spouse in a home, they obviously are naive and have not dealt with the realities of what this type of care entails and what it means for the family...
Unfortunately, I have to agree with this. I told DW I'd never put her in a nursing home. But in the end I had no other choice.
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Lee_WSP
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Re: Strategic Divorce - nursing home funds

Post by Lee_WSP »

So, the problem with divorce is the fact that it doesn’t actually change ownership of assets. It just splits them into two very distinct and very separate accounts, whereas before the couple would just carry on their lives as if they were one unit. Or at least they could, some people do choose to still keep very separate accounts, but that’s beside the point.

The problem then becomes the spouse in need of care will still own a sizeable chunk of assets. The strategy people who do not consult an attorney before trying this is to give the other spouse all the assets in the divorce proceedings. Well, it may have worked in the past, but states have caught on and it is deemed a gift and an available asset according to the look back periods.

So, go see an elder law attorney about this plan of yours. It’s entirely possible you have enough assets to just pay for the care out of pocket, or pay for X years and the facility will take the spouse. I do not know, I am not an elder law attorney (they specialize in medicaid trusts).
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Re: Strategic Divorce - nursing home funds

Post by LadyGeek »

Additional insensitive comments have been removed. If anyone feels uncomfortable with a post, please report the post using the ! in the top-right corner of the post.

SavinMaven - Please don't let any of this dissuade you from posting. We're here for you.
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Re: Strategic Divorce - nursing home funds

Post by SuzBanyan »

So sorry for what you and your family are having to go through. In addition to the excellent advice regarding a elder care specialist attorney, you should also make sure your estate plan is up to date and that it contemplates what would happen if you died unexpectedly while your spouse was ill.

In connection with this, it is not too soon to put together a support system of family and friends. Your spouse has been your partner and co-decision maker, but may eventually be unable to share that burden. That is a very lonely place. By starting early with creating your support system, it will help you ease the burden before it breaks you. Best of luck.
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Re: Strategic Divorce - nursing home funds

Post by InMyDreams »

By any chance have either you or your spouse served in the military? Aid and Attendance would be quite useful. Elder law attorney would likely be inquiring about that possibility.

Best wishes to you and your family.
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Re: Strategic Divorce - nursing home funds

Post by ljgs »

SavinMaven wrote: Sat Oct 23, 2021 10:16 am I found prior threads on divorcing for tax purposes, but am wondering if there is any advantage to a divorce to help us afford a nursing home. Maybe it's a given, but I do want to state up front we're not looking to do anything fraudulent, but we find ourselves in potentially a tough spot and want to do the best we can to plan ahead.

Both my spouse and I are in our early 40s. We learned this year he has a serious illness that will progress. Average lifespan is 9-12 years from diagnosis, but loss of physical independence could occur in half that time. For now, we are both working full time, and he wants to continue to work as long as he can. I make about 2/3 of our household income and can easily cover all current expenses without his salary. We have a teenager and a preteen. I have long-term care insurance through work, but he does not (and my policy does not cover him). We have term life insurance, but there is no option to receive a portion of it while alive to pay for needs. We were financially on track to FIRE by our early-to-mid 50s, but that was assuming our current rate of accumulation continued until then, which now seems unlikely.

I am still really reeling from this and maybe not thinking clearly - he currently looks healthy and feels fine, just his test results are very abnormal so it's kind of hard to wrap your head around. I fear what will happen if he needs 24/7 care before we can afford for me to stop working too to take care of him. If we were to divorce on paper, when he has to stop working, would his lack of income then qualify him for assistance?
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Re: Strategic Divorce - nursing home funds

Post by Sandi_k »

ljgs wrote: Mon Jun 10, 2024 11:21 am
SavinMaven wrote: Sat Oct 23, 2021 10:16 am I found prior threads on divorcing for tax purposes, but am wondering if there is any advantage to a divorce to help us afford a nursing home. Maybe it's a given, but I do want to state up front we're not looking to do anything fraudulent, but we find ourselves in potentially a tough spot and want to do the best we can to plan ahead.

Both my spouse and I are in our early 40s. We learned this year he has a serious illness that will progress. Average lifespan is 9-12 years from diagnosis, but loss of physical independence could occur in half that time. For now, we are both working full time, and he wants to continue to work as long as he can. I make about 2/3 of our household income and can easily cover all current expenses without his salary. We have a teenager and a preteen. I have long-term care insurance through work, but he does not (and my policy does not cover him). We have term life insurance, but there is no option to receive a portion of it while alive to pay for needs. We were financially on track to FIRE by our early-to-mid 50s, but that was assuming our current rate of accumulation continued until then, which now seems unlikely.

I am still really reeling from this and maybe not thinking clearly - he currently looks healthy and feels fine, just his test results are very abnormal so it's kind of hard to wrap your head around. I fear what will happen if he needs 24/7 care before we can afford for me to stop working too to take care of him. If we were to divorce on paper, when he has to stop working, would his lack of income then qualify him for assistance?
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This thread is 2.5 years old. I suspect the decision was made long ago....
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JPH
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Re: Strategic Divorce - nursing home funds

Post by JPH »

Taylor Larimore wrote: Sat Oct 23, 2021 10:26 am SavinMaven:

I am not qualified to give you an answer. Nevertheless, I wish you and your husband the best outcome possible.

Taylor
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