A prenuptial agreement may not protect your assets if nursing home care is needed

Under the “doctrine of necessaries,” a married person in New Jersey is responsible for their spouse’s support, which includes long-term health care. Jersey Shore Med. Center/Fitkin v Baum (NJ Supreme Court 1990). In that case, the Court dealt with whether a widow was legally responsible for the unpaid medical bills of her late husband. Up to that time, the husband would have been responsible for the wife’s “necessaries,” but this was the flip. The Court held, “we declare that both spouses are liable for necessary expenses incurred by either spouse in the course of the marriage. As long as the marriage subsists, the financial resources of both spouses should be available to pay a creditor who provides necessary goods and services to either spouse. That conclusion comports with our belief that in most marriages a husband and wife consider themselves as a financial unit in paying necessary expenses incurred by either marital partner. However, a judgment creditor must first seek satisfaction from the income and other property of the spouse who incurred the debt. If those financial resources are insufficient, the creditor may then seek satisfaction from the income and property of the other spouse.”

What this means is that a prenuptial agreement alone will not assure that when one spouse moves into a nursing home, the community spouse is off the hook if the ill spouse’s resources run out. The ill spouse would typically want to apply for Medicaid at that point. However, the Medicaid program requires that the resources of both spouses be taken into account, regardless of any agreement between them to the contrary, and the application cannot be filed until the total pool of available resources has been reduced below a certain maximum.

Federal Medicaid law does contain a provision that a person who is otherwise eligible cannot be denied Medicaid benefits just because their spouse refuses to support them, provided that  the applicant assigns his “rights to support” to the State as part of the application process. 42 USC 1396r-5(c)(3). This is referred to as “spousal refusal.” New Jersey’s regulations do not explicitly contain a spousal refusal provision, but the applicant does have to assign his “rights to support” to the State on the application. This would enable the State to sue that community spouse for contribution.

Particularly in later-life second marriages, these issues need to be thought about. The main point is you cannot assume that your prenuptial agreement will supersede the basic requirements of the Medicaid program when it comes to a married applicant.

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One thought on “A prenuptial agreement may not protect your assets if nursing home care is needed

  1. Interesting report Linda. In Michigan they ignore the pre-nup and simply ask “Can the spouse access the money?” Spousal refusal is not recognized in the Michigan program and untested in the courts.
    All the best,
    Jim

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