Long Time Partners but Never Married

A recent call we received started with an increasingly common problem.  Mary had called because her partner, Bill had a stroke which landed him in the hospital.  He failed to make enough progress to be able to go home and would need to stay in a long term care facility.

Mary told me that he had executed a power of attorney designating her as his agent.  When I asked about their relationship, she said they had been living together for almost 50 years but never did get married.  They lived in a home that Bill owned alone.  Mary’s name was not on the deed.  She explained that they had a joint bank account into which their Social Security was deposited and from which their bills were paid.  All other assets they kept separately.

Knowing that the cost of long term care would be about $14,000 Mary was understandably concerned about how to pay for it and whether she would be able to use Bill’s assets to continue to pay the household expenses.  Mary told me that Bill had more assets than she did.  

“What happens if he runs out of money”, she asked me.  Since Bill does not have long term care insurance, I told her the only option would be Medicaid but all his assets would need to be spent down including the house.  Additionally, any of his money spent on product or service for Mary would be subject to a Medicaid penalty.  That’s because Mary and Bill are not married so these transactions would be considered transfers for less than fair value.

Mary then asked if I had any options to suggest to her.  I asked her about Bill’s mental state.  She said that while physically he couldn’t take care of himself, mentally she thought he was OK.  I told her I had an idea.  Next week I’ll share with you what that was.