Lucy and Ricky have a great marriage, with an extended family to whom they wanted to leave everything when they passed. Unfortunately, Lucy was then diagnosed with cancer. She began to worry: What could happen if she died before Ricky did, and Ricky remarried? Or vice versa? What if the second spouse started pushing to get what Lucy and Ricky had intended would be their children’s inheritance? Neither Lucy nor Ricky – nor their children, needless to say – much liked this picture.
Instead of Lucy engaging in some hair-brained do-it-your-self scheme, Ethel convinced her that she and Ricky should consult an elder law attorney. She could help them create trusts designed to leave their property to their children and descendants. The trust could also require that if either spouse were to remarry, the second spouse must sign a marital agreement. In that agreement, either spouse would promise to keep Lucy’s and Ricky’s property separate.
The marital agreement aka prenuptial agreement (prenup) or post-nuptial agreement would have to be carefully drafted, to make sure it was fair to both remarried partners. This requires each party have their own attorney. But the advantages would be important. First, the prenup could protect Lucy’s and Ricky’s children from losing their inheritance to a new partner or step-siblings. Second, the marital agreement would require each second-marriage spouse to create comprehensive powers of attorney, to avoid guardianship proceedings if either spouse became incapacitated. Third, the marital agreement would require both spouses to make sure that any new estate plans would not disturb the provisions of Lucy’s and Ricky’s existing trusts.
A marital agreement should also consider the possibility that second spouses might someday become ill or incapacitated and might need Medicaid assistance to pay for nursing home or long-term care. The government can disregard marital agreements and, regardless what the prenup says, can count some income and assets against both spouses. In Texas, when applying for Medicaid, the assets and income of both spouses must be reported. Thus, the well spouse will have to pay for some nursing home costs incurred by the ill second spouse. Lucy’s and Ricky’s estate might also have to be spent on the second spouse’s medical expenses. These are heavy costs that could drain most or all of the inheritance Lucy and Ricky had set aside for their children. Lucy and Ricky are also concerned about the Medicaid Estate Recovery Program in Texas and want to protect assets from being drained from their estate under that program. An attorney well-versed in elder law knows how to protect that inheritance to a significant extent.
Do-it-yourself prenups are not the way to go. These are unlikely to contain provisions needed to plan for blended families or take into consideration what planning needs may arise if a future spouse needs to apply for Medicaid.
Are you thinking of a second marriage? Please contact Euless, Texas Estate Planning and Elder Law Attorney, Antoinette Bone, at (817) 462-5454 or email email@example.com today and schedule an appointment to discuss your situation and planning options. Remember: A prenup is not just for the young and Hollywood divorces.
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