Does a revocable trust protect one spouse from the other spouse’s medical expenses
My husband and I have had funded, individual revocable trusts since 1990. Currently are assets are split 60% in my trust and 40% in his trust. We both have IRA and ROTH accounts and are subject to RMD. We have zero debt and our house is in my trust. My husband has had 2 strokes and 3 brain injuries and is showing signs of diminished mental capacity. Otherwise he is in amazingly good health. He directed our attorney to make me trustee of his revocable trust, but he is the owner of the trust. This was done about 3 years ago. In addition he has given me legal power of attorney over his financial matters.
I enjoy good health and my older siblings are living into their 90s. My mother lived to 100. Based on this history I feel there is a possibility I will need to preserve my savings for many more years as I’m a mere 75 years old.
My concern is that at some point my husband may need in-home professional care or nursing home care which, of course, will be very expensive. If this happens I plan on paying for his medical expenses from his trust account. I will strive to obtain the best medical care for him, but I also need to be able to care for myself and would like to retain my trust for this purpose.
Hear are my questions….
1. Are the assets in my trust insulated from my husband’s medical expenses?
2. Are his IRA and ROTH accounts subject to medical expense claims?
3. If my assets aren’t protected from his medical costs, is there something I can do now to assure I will have funds available for my future?
Thank you.
Terry Says
Interesting question. And as to your liablities for bills and expenses that might come up, a lot depends on your state of residence. You should consult an elder-law or estate planning attorney in your state to discuss your vulnerability to a claim on his assets.
You are not obligated to pay for his custodial care expenses, but he will not qualify for Medicaid, even if you spend down his assets, in most states. So you’ll be faced with a tough choice, once you use up all his assets for his care. And yes, there is a chanced that the state or a facility could sue you for the costs.
It’s too late now to purchase long-term care insurance for him –but with this kind of longevity in your future, you might consider a policy for yourself. These days the best policies are either single-pay of maybe 5-pay combination life/ltc policies. If you don’t use the benefits, there is a death benefit for your beneficiary.
In some states, IRA accounts have less protection from creditors. So that’s another thing to ask your attorney about.
OK, you asked about what you could do to protect your assets. So I’ll give you the one answer you didn’t want to hear. The only sure (or almost sure) protection might be to divorce him, and get a legal separation of assets. But I’m not qualified to give the definitive answer on that, as again, much depends on the community property laws in your state.
If you are in Illinois, as many of my readers/listeners, I’d recommend consulting elder law expert Kerry Peck at 312-201-0900. And if you live in another state, get a recommendation for the attorney who prepared your trusts. Or go to www.search-attorneys.com, the website of the Matrimonal Bar Association.
