Spouse in Long-Term Care and the Need to Update Estate Plan


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There are certain times when individuals need to update their estate planning documents like their will, trust or power of attorney designations. Many individuals are familiar with common times, like when they get married or have children. However, another important time to update an estate plan is if a personís spouse has started to receive long-term care.

Long-Term Care Options

Today, there are many options concerning long-term care, such as full nursing homes, assisted living and receiving treatment at home. The particular option that is available in a specific circumstance depends on the nature of the individualís impairment, the types of assistance he or she needs, budget, insurance and family preference.

Update to Wills

When a person enters long-term care, the other spouse may want to modify his or her will. Many spouses make wills in which they leave everything outright to the surviving spouse, which often makes sense when the couple is primarily concerned with providing for each other for the remainder of their lives. However, when one spouse requires long-term care, this can cause issues.

Many individuals rely on insurance programs like Medicaid to cover their cost for long-term care. Long-term care is often very expensive and many individuals simply lack long-term care insurance or private funds to pay for this care in other ways. Medicaid can sometimes be used to pay for home-based care. In order for a person to be eligible for Medicaid, he or she must have a limited amount of resources that are counted by the Medicaid program. While Medicaid often provides protections for married couples, these no longer exist if one spouse dies. By leaving everything to a spouse, the non-institutionalized spouse may have difficulty qualifying for his or her own Medicaid in the event that the spouse receiving long-term care dies first.

Transfers to Spouse

In order to become eligible for Medicaid, the financial resources may need to be placed in the healthy spouseís sole name. These spousal transfers are often used to help a spouse who needs long-term care qualify for federal benefits. Once the spouse meets these qualifications, benefits may pay for long-term care. Under spousal protection rules, the other spouse may have a greater amount of resources that are now titles in his or her name. If the will is not changed and the spouse who is not receiving Medicaid dies first, the provisions in the will that provide all of the community spouseís to the institutionalized spouse can kick that spouse off of the benefits. This may result in the spouse losing Medicaid coverage and going for months or years while having to self-pay.

Possible Adjustments

To avoid making the spouse ineligible for benefits, special estate planning care may be necessary. The spouse may limit the amount of resources that the institutionalized spouse will receive so that he or she does not become ineligible for benefits. He or she may create a special trust that does not cause the recipient to lose benefits and instead just supplements the spouseís needs during his or her treatment.


Power of Attorney Updates

In addition to changing a will, a spouse may need to update a power of attorney designation. The spouse who is not receiving long-term care may have named his or her spouse as a power of attorney. However, the spouse may not be well enough to execute these duties if it became necessary. He or she may lack mental capacity or may have a physical disability that makes life more difficult. A power of attorney designation allows someone to handle financial transactions and make financial decisions on behalf of the principal. This is an important job that may need to be assigned to someone else if the spouse receiving long-term care cannot handle this position.

The spouse may also want to update any executed healthcare power of attorney appointment. This power allows the named agent to make healthcare decisions for the principal. The institutionalized spouse may no longer be able to handle this role or may prefer for someone outside an institution to be able to make these decisions.

Other Designations

There may be other designations that spouses naturally gave to their other spouse. This may include a trustee of a trust, a beneficiary for certain accounts or other important roles. These roles may need to be assigned to another person due to difficulties or to preserve eligibility for federal benefits. An estate planning lawyer can review an existing plan to see what changes may be necessary.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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