A number of times I've been approached by happy family members telling me about an elderly relative who, at age 75, 80, or 85, is getting married and they say, Isn't that terrific?" Well, I suppose it is a happy event, but . . .

Unfortunately, the likelihood that a spouse will need nursing home care increases dramatically in later years. And the healthy spouse who continues to live at home is legally responsible for paying the costs of nursing home care for the other spouse out of their own assets, regardless of how long they have been married! As you know, those costs can easily exceed $7,000 per month. With a national average nursing home stay of 2.5 years, that's $210,000.

Now the spouse at home may be able to protect a certain amount of money and get the spouse in the nursing home to qualify for Medicaid, which will indeed pick up the nursing home bill. In most states, that protected amount is currently $113,640, plus the house, car, and personal property. But if the couple has a total of, say, $400,000, and let's say most of that came into the marriage as the savings of the healthy spouse, then the healthy spouse will only be able to protect $113,640 of his or her savings, and all the rest may have to be spent down on the nursing home spouse's care.

Well, why can't they just sign a pre-nuptial (pre-marital) agreement? Typically, such an agreement states that each spouse is free to do what they want with the assets they brought into the marriage. Some of these agreements even specifically state that neither spouse is legally obligated to pay for the long-term care of the other spouse. Unfortunately, the Medicaid rules simply brush these agreements aside and act as if they were never signed. So, while the pre-nuptial contract is completely enforceable and legal for all other purposes, it is useless for Medicaid planning purposes.

So is there nothing the happy couple can do to protect themselves? Short of staying single and "living in sin," each partner might consider establishing an irrevocable trust and transferring all but $100,000 into such trust. That way, no matter which spouse goes into the nursing home, only the money outside the trust will be at risk. However, a transfer into such a trust will result in a period of disqualification from Medicaid should either spouse need to apply for Medicaid within five years of such transfer, so this needs to be fully understood when meeting with the attorney setting up the trust.

What about income? Must the spouse living at home share a portion of his/her income with the nursing home spouse? ("Income" includes interest, dividends, Social Security, pensions, wages and pretty much any regularly occurring payment, as opposed to a one-time receipt of funds.) The good news is that, no, the spouse living at home is not legally required to contribute one dime of his/her income to the nursing home costs of the other spouse. In fact, if the spouse who lives at home has an income that is very low, the nursing home spouse is permitted to shift some of his/her income to the other spouse before having to pay the nursing home. What is "too low"? This is set out in the federal rules to be below $1,839/month, although it can be as high as $2,841–and sometimes even higher–depending on the financial needs of the at-home spouse.

In any event, a word to the wise. As some of my clients say, "It would be so much simpler if we didn't have any money!"