What issues supersede premarital agreements?
For many older couples with long-term marriages, the notion of separating or divorcing after so many years together remains almost unthinkable. Yet, as baby boomers age, the divorce rate among seniors is increasing.
Due to a growing divorce rate among this population, premarital agreements now are widely accepted, even among the elderly. Seniors should approach the idea of a premarital agreement with an open mind. Signing a premarital agreement does not automatically mean that you are planning a divorce. Instead, it is recognizing the seriousness of the establishment of the new relationship.
Additionally, it communicates the couple’s concerns for the future financial security of their other loved ones, such as adult children from prior marriages, and it expresses their respect for the other’s hard-earned assets.
Many divorce attorneys advise their altar-bound senior clients to put premarital agreements in place before tying the knot. A premarital agreement creates a plan for how the couple will merge their economic and emotional lives. Such premarital agreements can address maintaining separate property, division of assets upon divorce, dealing with income and bill paying during the marriage. These agreements can help manage the issues and expectations particular to a later-in-life marriage.
However, seniors considering remarriage may see significant drawbacks. Many fear the loss of a former spouse’s pension payments, Social Security and medical insurance benefits. Many seniors live on fixed incomes and simply cannot give up these valuable benefits obtained in a prior marriage.
Many seniors also shy away from remarriage because they do not want to put their children’s inheritances at risk. By not getting married, they are protecting their assets.
It is likely that both spouses have strong feelings about protecting their adult children. Without a frank discussion, it may end up causing their loved ones a great deal of heartache and confusion when one spouse requires long-term care or passes away, requiring a division of hopelessly mixed separate and community property.
A premarital agreement and frank discussions that go with it can help ensure the financial well-being of the marriage. A plan can be made for dealing with future health care issues, disability, and death.
However, there are some situations where premarital agreements cannot help. Many remarried seniors worry about what will happen to their assets if their new spouse enters a nursing home. They are concerned that the hard-earned assets could be lost.
Although a premarital agreement will help ensure the person’s assets go to their loved ones at death and protect their assets from claims of the surviving spouse when he or she dies, the premarital agreement will not protect the assets from their spouse’s nursing home expenses. It surprises many to learn the premarital agreement does not prevent Medicaid from considering the assets of both spouses when determining Medicaid eligibility for the spouse in the nursing facility.
Medicaid is the governmental benefit program that pays nursing home costs. It has income and asset eligibility requirements. The rules for determining eligibility are exactly the same for couples with a premarital agreement as for those without one. Thus, all of the couple’s assets are at risk when one spouse needs long-term care.
As a remedy, long-term care insurance policies can be put in place for both prospective spouses. However, many elderly people are not insurable at this stage in their lives due to age or health related issues.
Harsh consequences can occur if the couple does not address the economic ramifications of getting remarried. Each should ask themselves: “What will happen if I get sick?” “How will my long-term care costs be met?” “Does the person I want to marry have long-term care insurance?” If not, “Are there sufficient assets in both of our estates to privately pay for long-term care?”
You may visit our website at www.wrightabshire.com. Wesley E. Wright and Molly Dear Abshire are attorneys with the firm Wright Abshire, Attorneys, P.C., with offices in Bellaire, the Woodlands, and Carmine. Both are Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate Law and are certified as Elder Law Attorneys by the National Elder Law Foundation. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case, but should be considered general information.