Late-Life Marriages: Dot Your “I”s Before You Say “I Do”

Senior Couple WeddingWe often serve clients who marry (usually, re-marry) late in their lives, often many years after a divorce or after the death of their former spouse. While we all support romantic love that leads to joy and fulfillment, we also counsel our clients to understand some of the other consequences of marriage. In this blog post, we outline how late-life marriage impacts finances, estate and incapacity planning, and eligibility for Medicaid, Veterans Benefits, and Social Security benefits.

Separate Assets

One of the biggest questions raised by late-life marriage is whether the spouses will maintain separate assets, or whether they will join their assets together. Both spouses may have children by their first marriages, and both spouses often want to keep separate bank, retirement, and other accounts. Maintaining separate bank accounts is relatively easy, but we always counsel our clients- whatever their circumstances- to review their beneficiary designations. Do you want your surviving spouse to be named as beneficiary on all of your accounts? Do you want these accounts to pass to your children from a prior marriage? These are often difficult and sensitive questions. Even if these questions are addressed proactively, there can be resentment down the road if an adult child feels that he or she has been “cut out” of Mom or Dad’s estate plan.

Medical and Financial Decision-Making

Another big concern is who will be making financial and healthcare decisions in the event that one or both spouses become incapacitated. Here, the Georgia medical consent statute establishes a clear statutory order in which spouses are first in line to make medical decisions for each other. Contrary to popular belief, however, no such legal presumption grants one spouse the ability to make financial decisions for the other spouse’s separate assets and accounts. You need to have a validly executed Durable Financial Power of Attorney in place. Whether a late-life spouse, adult children, or others should be making these decisions is an issue that every client answers differently. We often see clients who name their new spouse as their primary Health Care Agent, but still want a responsible adult child to be named as their primary Agent under their Financial Power of Attorney.

Real Estate Considerations

For spouses in a late-life marriage who have real estate, they will also want to think carefully about how this property is going to be handled. In some cases, clients decide to sell the real estate during their life, often because they need the sale proceeds to pay for care. This approach has the added benefit or reducing or eliminating the likelihood of having to probate their estate. Other clients, however, want to keep their primary residence, beach house, farmland, or other property in their family. Achieving this goal requires careful consideration. If applying for Medicaid is not necessary and avoiding probate is an important goal, then placing the real estate into a Revocable Living Trust is sometimes advisable. In other cases, the owner may want to gift the property to one or more adult children, but doing so would potentially create a delay in Medicaid eligibility if the senior who gifted the property were to apply for Medicaid in the five years immediately following this gift.

Nursing Home Medicaid Eligibility for Married Couples in Georgia

Significantly, there is no Medicaid “transfer of assets penalty” between spouses in Georgia. We routinely advise married clients on how to protect the equity value of their home and other assets from Medicaid estate recovery, which can often result in substantial asset preservation.

For nursing home Medicaid eligibility in Georgia, a single person can have $2,000 in countable assets, and up to $10,000 designated for burial (a slot often filled by a life insurance policy). In contrast, a married couple can have up to $121,220 in countable assets (such as bank accounts, brokerage accounts, any vehicles beyond the first vehicle) and one spouse can still qualify for Medicaid. (Note that in either scenario, one’s homeplace property does not count as long as the equity value is below $552,000). Retirement accounts like IRAs, 401(k), 403(b), or similar accounts don’t count, but the Medicaid recipient must take regular distributions and use them to help pay their cost of care.

Married Couples and Veterans Aid & Attendance Benefits

What about the asset limits for VA Aid & Attendance benefits? At present, there are no published asset limits for single or married individuals (veterans or surviving spouse of a veteran) applying for Aid & Attendance, but having more than $40,000-$80,000 in countable assets warrants a conversation with an elder law attorney on how to plan for eligibility. For anyone who is receiving a pension from the Veterans Administration as a widow or widower of a veteran, we will always inform them that remarriage would terminate their survivor benefits.

In general, a divorced (former) spouse of a veteran will be ineligible to receive VA benefits.

The Impact of Marriage, Divorce, and Remarriage Upon Spousal Social Security Benefits

Another common question we receive is about the impact of marriage (or divorce) upon Social Security benefits. This is a source of much confusion. Please note that none of these rules addresses SSI (Supplemental Security Income), because there are no spousal benefits for SSI recipients.

General Rule Regarding Social Security Spousal Benefits:

Generally, you must be married for one year before you can get spousal Social Security benefits on your living spouses’ record.

Social Security Benefits After Divorce:

As a divorced spouse, you can collect benefits on your ex-spouse’s record, even if the ex-spouse has remarried and even if the ex-spouse’s new spouse is collecting on the same record. However, to make an initial claim on your ex-spouse’s record, you must meet the following requirements:

1. You were married for at least 10 consecutive years;
2. You are at least 62 years old;
3. Your ex-spouse is eligible for retirement benefits;
4. You are not currently married.

If your ex-spouse has not yet applied for retirement benefits but can qualify for them, you can receive benefits on his or her record, provided you have been divorced for at least two years.

Social Security Survivor Benefits

To receive a Social Security survivor benefit, a widow or widower must have been married to the deceased worker at the time of his or her death and for at least nine months immediately prior to the day in which the worker died, unless an exception is met. Survivor benefits are equivalent to the deceased spouse’s full Social Security benefit amount.

If you are the divorced (former) spouse of a worker who has died, you could still be eligible for survivor benefits if the marriage lasted 10 years or more. However, if you remarry before you begin receiving survivor benefits, you cannot collect survivor benefits (unless the later marriage ends for any reason). If you remarry after begin receiving survivor benefits, you can still receive survivor benefits based on your former spouse’s record. However, if your new spouse is also collecting Social Security benefits and you would receive a higher amount based on the new spouse’s work record, you will receive the higher amount.

While every situation is unique and this blog post is by no means exhaustive, we hope that it has helped you understand many issues that you or a loved one should consider before saying “I do” late in life.