Now that same-sex marriage is finally the law of the land, suddenly there’s a new issue. You can get married – but should you? For many same-sex couples, thinking about whether or not to marry is relatively recent, and thinking about the financial implications of marriage is unfamiliar. The issues below apply to opposite-sex couples contemplating marriage as well. Marriage brings with it numerous complicating financial factors that may argue for or against marriage, particularly if you are older and on the fence about whether to take that stroll down the aisle.
For example, surviving spouses and ex-spouses receive Social Security Survivor Benefits – unless or until they remarry. If you don’t have these benefits, but would be eligible to receive them in the future as a surviving spouse, marrying would help. If you are already receiving them and need to keep receiving them, getting married would cut off that source of income.
In many states (including New York), surviving spouses are also entitled to claim a certain portion of the decedent spouse’s estate; each state has its own formula. This is called the “right of election.” If you marry and subsequently pass away, your spouse may elect to claim his or her portion of the estate, even though you have named others in your Will. You might be marrying because you want your spouse to be financially secure. However, if you feel your beloved already has enough assets, and you would like to leave your money to other beneficiaries, such as children from a prior marriage, marrying could put that plan in jeopardy. In New York, a pre-nuptial agreement would guard against it, but must be drawn up carefully to ensure it accomplishes your goals.
Besides financial benefits, marriage also brings with it significant financial responsibilities toward your spouse. These can be a very serious issue when you and/or your spouse need long-term care. In some states, including New York, spouses are required to support each other financially, and provide for any care the other might need, as long as they have the financial means to do so. This can be a huge financial drain; in fact, ruinous, if you don’t plan ahead.
States have taken steps to guard against the impoverishment of the “well spouse.” In New York, a well spouse is permitted to retain up to $123,600 of the couple’s assets for him- or herself, based on a set of guidelines, and the “ill spouse” can still qualify for Medicaid if his or her “countable resources” (assets) are below $15,150 (2018 figures). However, although $123,600 is a lot of money, it might not pay for even a single year of private-pay nursing home care, and possibly not for more than a year or two of home care, if the spouse who is currently well subsequently develops a chronic condition. Thus, counting on this provision to protect the well spouse is not necessarily the best plan, depending on your individual circumstances.
In New York, there is a strategy called “Spousal Refusal” that can help partially protect your assets. If you refuse to pay for your spouse’s care, Medicaid cannot decline to provide services for your spouse. So your spouse can receive Medicaid benefits as long as the assets in his or her name do not exceed $15,150. Do people actually refuse to pay for their spouse’s care? They do – in fact, so frequently in New York that there is an official Spousal Refusal form. Transfer the required assets in to the well spouse’s name, sign the form, and the ill spouse can receive Medicaid benefits right away.
However, Spousal Refusal does not get the well spouse off the hook. Medicaid is permitted to demand repayment of the amounts they have spent on your spouse. And they do, although not always, and even if they do, it’s not as dreadful as you might think. Paying privately for an aide can cost twice as much as Medicaid pays an aide, and if your spouse is in a nursing home, the Medicaid rate is far less than the private-pay rate. If you had paid privately, you would have paid far more than Medicaid did, but Medicaid will only seek reimbursement for what they actually paid. So even if Medicaid demands reimbursement later, you are already getting a significant discount. In addition, you can sometimes negotiate the amount you repay to Medicaid.
This is a major issue that should be considered in the decision about whether or not to marry, particularly if long-term care is likely to be an issue. If you are not married, you have no legal obligation to pay for your partner’s care. So if you are worried about being able to live on the savings you have, getting married creates a new financial risk, even if you submit a Spousal Refusal.
There are also implications regarding your income, should your spouse need long-term care. If you are married, and one spouse is in a nursing home, the nursing home spouse is required to pay almost all of his or her income towards the cost of care – unless the well spouse’s income falls below a certain level (known as the Minimum Monthly Maintenance Needs Allowance, or MMMNA). In that case, a portion of the ill spouse’s income can be shifted to the well spouse, to bring his or her income up to the MMMNA. If you remain unmarried, the well partner has no claim to any of the ill partner’s income. If the well spouse’s own monthly income exceeds the MMMNA, Medicaid will require him or her to contribute 25% of the excess to the cost of the ill spouse’s care.
Yes, it’s extremely confusing – and the issues above are just a sampling. It’s a maze of complicated calculations and “if-this, then-that” scenarios. There are different rules that apply to the disabled, too. Educating yourself is helpful and important (our website, lamson-cutner.com, is very informative about many of these issues) but often it’s difficult to be sure you have a full understanding of the issues. This is why it can be hugely beneficial to seek the advice of an Elder Law attorney if you are older or disabled, and are worried about the financial impact that marriage could have on you and your health care situation. The cost of long-term care is devastating, so planning ahead can be critical to enjoying your senior years with your partner or spouse in the best possible financial position.
Lamson & Cutner is solely dedicated to the practice of Elder Law. We are highly skilled at analyzing and calculating optimal solutions for our clients. Excellent client service is one of our top priorities. The testimonials our clients give us week after week clearly show that we are achieving these goals. If you are older or disabled and contemplating marriage, contact us today to discuss your circumstances, or visit lamson-cutner.com to learn about planning options for your situation.
Lamson & Cutner is an experienced New York and Westchester County Elder Law firm, and our clients come from the Bronx, Brooklyn, Queens, Rockland, Putnam, and Dutchess counties as well. Our offices are in convenient locations in Manhattan and in Harrison, NY in lower Westchester County.