Mary and Bob – Almost Divorce and Then Tragedy Strikes (Part 2)

Last week we were discussing Mary and Bob, in the process of getting divorced and then Bob was seriously injured in a car accident.  He survived but now faces a long recovery road ahead, one which will result in his need for long term care.  Mary, since she is still married to Bob, is being looked upon as the decision maker.  But can she really serve in that role?  Does she even have the legal authority to do so?

 Because Medicaid treats the married couple as one unit, their assets are combined for purposes of determining Bob’s eligibility.  The home is an exempt asset, as long as the healthy spouse continues to live there.  The solution then seems clear.  Transfer Bob’s interest in the home to Mary.  After all, that’s what they had decided upon before Bob’s tragic mishap.  But, hold on a minute.

Bob had agreed to give the house to Mary because he had more earning potential.  This was a way to even things up.  But, that isn’t the case anymore.  Bob can’t work and doctors don’t know if he’ll ever again be able to earn a living.  If not, then can he really afford to give Mary the entire home, leaving him with literally nothing?   If he is able to leave the nursing facility where will he go and how will he pay for it?

There is also the matter of who can make decisions for Bob.  Right now it is not clear whether he has capacity.  He never executed a power of attorney so the only option is a guardianship, but, again, who is going to be the guardian?  We probably would look to the spouse first, but Mary was about to divorce Bob.  That doesn’t automatically eliminate her as an option but a court is certain to question whether she can act in his best interest.  Their only child is in the military overseas and there doesn’t appear to be any other family.  Maybe a court appointed guardian is appropriate here.

So then what happens to the home?  While Mary doesn’t want to abandon Bob in time of need she is also concerned about her future.  There may be a solution.  Bob can qualify for Medicaid if Mary remains in the home but Medicaid rules require that Bob’s name be removed from the deed.  That should be fine for Mary but someone has to protect Bob’s interest. 

Mary still wants to proceed with the divorce and she feels that the agreement they had should remain in place.  The question then is whether Bob wants to change the agreement.  Bob didn’t consult an attorney when he and Mary reached their agreement.  He didn’t think he needed one, nor did he want the expense.  Now that his mental capacity is questionable, however, he needs proper legal advice, especially if he must transfer his interest in the home to Mary.  Will that be permanent or just temporary?  Mary and Bob may disagree on that.  

And that’s what makes this so complicated.  Mary and Bob are still interconnected in so many ways.  They need to work together to reach the best result for both of them.  Not what either of them planned for, but when a medical catastrophe hits long term care issues will radically change anyone’s life.