by Mark A. Krohn, Partner
Jacobowitz & Gubits, LLP

Gary and Mary have been happily married for fifty years. Mary now needs a nurse to attend to her needs during most of the day. Gary has been caring for her at home, but it is becoming clear that he will no longer be able to continue such care. Gary and Mary have about $200,000 in cash, stocks, and CDs. Gary doesn’t want to gift the family assets away to the children because he will lose control of the funds. Even if they did give away the funds they would have to pay nursing home costs for approximately fifteen (15) months. Sadly, their best plan may be to get a divorce. Provided Gary gets all of the savings, Mary will immediately qualify for Medicaid when she goes into a nursing home, because assets divided in a divorce do not cause a Medicaid disqualification period. That portion of the family assets going to Mary will have to be used to pay for her nursing home costs. However, that portion going to Gary will be protected. If they do get a divorce, Gary will only be able to keep $74,820.00. In other words, a divorce would save them $25,180.00.

Finally, while a divorce should only be considered as a last resort, if the decision is put off too long and one of the spouses becomes incompetent, a divorce may then be impossible. Courts are reluctant to grant divorces where one spouse is incompetent. And if a Court were to allow such a case to move forward, a guardian would likely have to be appointed to represent the incompetent spouse’s interest. The guardian has a legal duty to act in the best interest of the incompetent spouse, which may not be in your best interest. The guardian may also decide that, based upon the incompetent spouse’s high medical costs, more assets should be allocated to pay for that spouse’s care even when Medicaid would otherwise pay.

Whether to divorce to protect family assets is clearly an unpleasant prospect. However, the financial impact resulting from choosing not to divorce may prove to be even more heartbreaking. There is clearly no substitute for planning in advance.