In our practice, we see many folks who have found love for the second (or third) time. Because they were really burned in a divorce, or more often because they simply want to protect their children, a prenuptial agreement (“prenup”) is discussed.
A properly prepared prenup (with full disclosure by both parties of all assets, income, and liabilities), with each party represented by their own attorney can be a wonderful planning tool.
However, there are two instances when that wonderful prenup will do you no good at all.
- Child Support. Of course, and as it should be.
- Nursing home expenses.
That’s right—a prenuptial agreement does NOT and cannot protect you from the nursing home expenses of your spouse. That means that if you have been thrifty and accumulated several nice jumbo CDs, you can kiss them goodbye if your better half ends up needing extended nursing home care.
This is because that spouse will not qualify for Medicaid benefits as long as your assets would not allow you to qualify. Now, you will not have to move from your home as long as it is worth no more than $552,000 (in 2016), and you can keep a decent amount of money (up to a max of $119,220 in 2016) and monthly income (up to a max of $2,980.50 in 2016) and the disabled spouse then qualifies for Medicaid. But if you are sitting on a big nest egg (or a family farm)—and you probably are if you felt that you needed a prenup in the first place—you need to sit up and pay attention.
We have other planning tools to offer which help alleviate this exposure, but you have to plan intentionally and early. Give us a call.