Gray Divorce is Never Required for Medicaid Asset Protection

Mark and Maura have been happily married for fifty-five years.  Mark suffers from advanced Parkinson’s disease and now needs a nurse to attend to his needs for most of the day.  Maura has been caring for him at home, but it is becoming clear that she will no longer be able to continue such care.  Mark and Maura have about $300K in cash and stocks.

Maura comes to see me for Medicaid Asset Protection.  She heard from a neighbor that divorce is the only way she could get Mark qualified for Medicaid.   Fortunately, I explain to Maura that her neighbor is wrong, and she is greatly relieved.

For many people, marriage involves more than just finances, and the idea of divorcing a loving spouse of many years is unconscionable.  The healthy spouse, as was the case with Maura, may feel as if she is deserting her sick husband, and the couple will have to deal with the public nature of the divorce proceedings.

In a divorce, there is also always the possibility that the judge will not order a division of property in accordance with the parties’ desires or even in accordance with the parties’ written agreement.  A divorce may be worthwhile only if a judge grants all of the assets to the healthy spouse.  Yet a judge may be unwilling to do so if he feels that the sick spouse with high medical costs deserves more.  The judge may also view the parties’ agreement as an act intended for Medicaid eligibility only and may be unwilling to use court authority to help the healthy spouse engage in Medicaid Asset Protection.

There is also the issue of incompetence.  Getting a divorce is much more complex when a guardian has to be appointed by the court for the spouse who is no longer competent. Legally, it would be the guardian’s duty to act in the best interest of his client only and he or she would not be as worried about the best interests of the healthy spouse. If this is the case, it could be difficult for the couple to obtain their desired financial outcome.

The Farr Law Firm, P.C. helps couples like Mark and Maura obtain Medicaid assistance without having to divorce or deplete their life savings. That being said, sometimes a Medicaid Divorce is one of the best options for married couples seeking Medicaid — especially if the couple has large retirement accounts such as IRAs or if there is a large amount of income coming to the nursing home spouse that needs to be shifted to the healthy spouse — and the Farr Law Firm regularly does Medicaid-style divorces when appropriate and when the client is willing, but even then it is never required. With proper planning, a spouse who is able to stay at home can retain all of the couple’s assets and most or all of the income while Medicaid takes care of the nursing home.  We aim to ensure that the spouse who is remaining at home is able to maintain his or her dignity and standard of living.  Read more about the services we offer to help couples in similar situations.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.