Over the weekend, The New York Times' Nicholas D. Kristof wrote a touching column about his friend who felt torn between divorcing her sick husband and eventually living as an impoverished widow. The problem was that her spouse had early-onset dementia and as his care needs increased, so too would the medical bills. If the wife wanted to preserve even a small fraction of her savings for her own retirement, she had to legally separate from the man she loved. As I read the piece, I couldn't stop thinking of my mother-in-law who once faced a similar dilemma.
My mother-in-law ultimately decided against divorce. In fact, I don't think she ever seriously considered it. After nearly 40 years of marriage she felt she couldn't do something so hurtful to her husband. While that decision was the right one for my mother-in-law, it wasn't without its consequences. Staying married left her financially vulnerable while she was in her 60s and hoped to live for another 20 plus years.
Despite meeting with highly qualified estate planning experts, my mother-in-law never found a good way to protect a portion of her assets so that she would be guaranteed to have enough to live on into her own old age. She also quickly realized that every attorney she spoke to for advice had different opinions and that the laws were constantly changing. So even if she had chosen a strategy to shield some of her money, there was no telling if her actions would be considered legal in a few years.
My father-in-law passed earlier this year and my mother-in-law still has enough money to get by. It turns out that the one thing that saved her assets was a little bit of luck. She was able to purchase long term care insurance for her husband (who was already sick) some years back before the policies got tough on what and who they would cover.
Today, while long term care insurance can still make sense, couples can't purchase it once they're already facing an illness and know they will use the coverage. Instead, all families can do is try to talk about contingency plans before one spouse gets sick.
I would also caution couples to think twice before transferring wealth to children. There is so much talk in estate planning circles about future inheritance taxes that many professionals are counseling older couples to start giving away their money now. But the one thing I learned watching my mother-in-law deal with her husband's care is that medical help is very expensive. If parents give away too much cash, they may not have what they need later on when their health deteriorates. So unless you have some sort of contract with your kids that they'll take care of you financially later in life, it's better to hold onto your assets until the end.
Old Couple image by bravenewtraveler, CC 2.0.
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