Give Your Spouse a Final Gift: Asset Protection

I often meet with a recently widowed man or woman together with one or more of their children. Typically, I am asked how the surviving parent’s assets can be protected should he or she later need nursing home care. Unfortunately, at that point, all that the surviving spouse can do is give away assets, either to the children or to an irrevocable trust for their benefit, and wait five years. I usually avoid bringing up the hard truth that had the deceased spouse done some asset protection prior to death, the widow or widower’s assets would be safe, even if it was done only months or even weeks before.

If you are married, no matter how sick you are, you have the ability to give your spouse a wonderful gift: greater economic security. If you execute a will saying that, at your death, the assets that you were going to leave to your surviving spouse anyway will instead be left in trust for his or her benefit and you name a trustee (such as one or more of your children or anyone else other than your surviving spouse), then all the assets that are in your name at the time of your death will be safe, non-countable and non-lienable should your surviving spouse later need to qualify for MassHealth, even if he or she needs to qualify the day after your death. There is no five year wait.

You need to make sure, of course, that the assets you want to protect are in your name at the time of your death and that the assets will therefore go into this “testamentary trust” (a trust that is created through and is part of your will). So if your assets are held jointly with your spouse, you want to make sure someone has the presence of mind (and the legal power) to transfer the assets to your name alone before you die. If you have assets such as IRA or 401(k) accounts that name a death beneficiary, you want to make sure that the death beneficiary is changed to be the testamentary trust under your will for the benefit of your spouse. You want to make sure you have executed a Power of Attorney (POA), and that you tell the person named in the POA to get this done before you die if it has not been done already. The point, though, is that these transfers into your name can be done at the last minute, sometimes on the day you die, as long as you have already completed your will.

So whether you are sick or well, it’s never too late to protect your spouse, so long as you do it before you are gone. Just don’t wait too long. It’s always too early until it’s too late.

If you need more information on this, you can contact me at (508) 860-1470 or abergeron@mirickoconnell.com. You can also view my 10-minute Q&A Fireside Chats on Frank and Mary’s YouTube Channel, http://www.youtube.com/elderlawfrankandmary and find more in-depth commentary on legal issues on Mirick O’Connell’s Trusts and Estates blog, “Getting All Your ‘Docs’ in a Row”.