Heymann & Fletcher

Carefully calculated property division could help seniors

Imagine being happily married for many years, only to find that financial pressures have placed such a strain on the marriage that divorcing might be the best possible solution. That is the case for far too many New Jersey residents who are facing increased health care costs as they reach their later years. Some will eventually file for divorce as a last ditch effort to leverage property division as a means of paying for necessary care.

This situation can arise when an older couple is faced with the need to secure residential care for one spouse. If the couple owns their home and has set aside a modest amount of savings for their later years, they may not qualify for Medicaid assistance that would help to cover the cost of residential care. In order to qualify, the couple would need to "spend down" their accumulated assets in order to qualify for assistance. That could leave one spouse with decreased financial security as he or she enters the later stages of life.

One solution may be for the couple to file for divorce. In doing so, it is possible to structure a property division settlement that gives most of the couple's assets to the spouse who is not in need of residential placement. That would decrease the other spouse's level of wealth to the point that Medicaid coverage would be possible, and help to cover the cost of residential care. Such a solution is never an easy choice, especially for couples who have had a long and happy marriage, and for whom divorce was never an issue that needed to be considered.

However, in certain cases, a strategic divorce is the best possible way to obtain much-needed Medicaid assistance while also preserving the financial stability for the other spouse. For those in New Jersey who are considering this type of divorce, it is important to work with a family law attorney who can assist in crafting the best possible property division plan to meet the needs of the couple. With the Affordable Health Care Act under fire in Congress, there is concern that Medicaid coverage rules could change in the coming months or years.  

Source: news.ku.edu, "Medicaid expansion possibly reduced 'medical divorces,' KU economists find", George Diepenbrock, Feb. 15, 2017

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