Mark Glendon

Understanding Spousal Impoverishment

In the world of estate planning, you'll hear all kinds of technical and legal terms thrown around, but spousal impoverishment is one that often confuses people. What is spousal impoverishment? Does spousal impoverishment change how estate planning is handled?

To help you get a better understanding of your rights as a spouse in estate planning, below is a helpful guide to explain the basics of spousal impoverishment:

How Long-Term Care Affects Spouses

Before answering the question of what is spousal impoverishment, it's first important to understand the hardships that can be placed upon married couples when one enters long-term care. In addition to the need to pay for medical expenses, admission to a long-term care facility often means that the spouse who is still living at home has diminished income and may become impoverished.

To combat this, the Spousal Impoverishment Law was passed in 1988. This law protects the assets of the spouse who is at home when the other spouse enters long-term care. The spouse who is entering long-term care must also apply for Medicaid for the spouse at home to qualify for protection.

How Spousal Impoverishment Affects Estate Planning

Because spousal impoverishment can change the financial dynamics of a home, an estate planning attorney will need to take into consideration all income and assets when helping someone protected by the Spousal Impoverishment Law. Estate planning in this sense may mean transferring assets legally or filing for additional protections for any assets not covered by the law.

According to the Centers for Medicare and Medicaid Services (CMS), the spouse living at home, also known as the community spouse, can set aside a certain amount of assets to avoid becoming impoverished when the other spouse enters long-term care. Additionally, some of the admitted spouse's income or earnings may also be protected and set aside for the community spouse.

Because these scenarios can be complex, it's best to work with an estate planning attorney for guidance. Your attorney will be able to tell you exactly what you may be entitled to in the unfortunate event that you or your spouse end up in a difficult situation.

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Mark writes often about estate planning. His articles may include topics like real estate closing attorney and business succession laws to help the people in needs. You can find his thoughts at probate administration blog.