Longtime Partners but Never Married (Part 5)
In last week’s post about Bill and Mary, I told you that we applied for a guardian to be appointed for each of them. The court approved their neighbor and friend, Nancy. Bill had sufficient assets to pay for his care for at least several years. Mary did not.
By the time we were able to get Nancy qualified as guardian so that she could access Mary’s assets, her unpaid nursing home bill was already up to $60,000. Nancy was able to determine that she had about $100,000 in total assets so we needed to quickly prepare for Medicaid.
The fact that Bill and Nancy had lived many years like a married couple but never did marry was a potential problem. That’s because of Medicaid’s 5 year look back. Mary and Bill combined their income into one joint account to pay household bills. Documenting for Medicaid what Mary’s money was spent on vs. what Bill’s money was spent on wouldn’t be easy.
We would need to establish that Mary spent her money and received something of equal value in product and/or service for her. To the extent any of her funds were spent to benefit Bill that would be considered a transfer for less than fair value and would cause a Medicaid penalty. The more money spent for Bill the longer the Medicaid penalty – or waiting period for Medicaid.
For example, if any of her money was spent to repair the home, Medicaid could consider that a transfer for less than fair value since she did not own the home. It was 100% owned by Bill. On the other hand, I could possibly argue that these payments were in lieu of rent. Any resulting Medicaid penalty would mean Mary would have no funds to pay the nursing home.
One could certainly argue that in a long term relationship like this, Bill would have likely used some of his own assets to provide for what Mary needs. Once again, however, the failure to sit down with an attorney and discuss what Bill and Mary wanted and execute powers of attorney when they had the chance, made the matter much more complicated.
As guardian, Nancy does not have the ability to assume what Bill would have done and use some of Bill’s assets to benefit Mary without applying to the court for approval. This would be time consuming and cause additional legal fees and there is no guarantee that a judge would even consent to it.
While getting married could have solved some of these problems, that’s not to say that the mistake here is that Mary and BIll should have married and didn’t. The error they did make, however, is in not consulting with an elder law attorney well versed in long term care planning and Medicaid issues to even discuss the issues. Whether they decided to marry or not, in each case there were different issues that needed to be addressed. They should taken steps to protect themselves. The worst plan they could have chosen was no plan at all.