Elder Law Estate Planning Issues for Women

When Husband Handled the Finances

While women and men have many issues in common, some of these issues tend to affect women more deeply. For example, in the case of the death or disability of a spouse, it is more often the surviving wife who is unfamiliar with handling the family finances. In the course of planning for such a couple, it is wise to find a financial advisor that the wife can turn to. Ideally, this relationship should be developed over the years while the husband is living, so that there is a seamless transfer of decision-making. Where such a relationship with a financial advisor is absent, one of the financially savvy children may be named as a co-trustee with the surviving wife or, should none of the children be suitable for that role, the attorney as co-trustee may be considered.

Children From Prior Marriages

With the increase in second marriages, many women have children from previous marriages. How will those children fare should a wife die first? This dynamic may be complicated by the fact that there are children from the second marriage as well as the first. Here, we consider making partial gifts to the children of the first marriage, who are generally older, on the wife's death. The balance of the assets may be kept in trust for the surviving husband, providing for him during his lifetime and, on his death, paying out to the wife's children from the second marriage. Alternatively, wife's entire estate may be held in trust and pay out to all of her children in equal shares after the husband dies.

In the second marriage context, what about the husband's children from a prior marriage? If the wife is going to be financially dependent on some or all of his assets after his death, she may want to avoid the situation when one or more of the husband's children are in charge of the money after he dies. Here, the pitfalls are many. They may not wish to distribute principal to her, feeling that the funds are coming out of their inheritance. She may find out that they do not care for her personally, even though this was not apparent when their father was alive. They may disapprove of her subsequent remarriage. We have recommended to many women clients that they choose the lawyer to act as co-trustee with her after a husband's death. This way, the conflict of interest that the husband's children have is eliminated and she may handle her personal and financial business privately with her own lawyer. Second marriage planning is particularly important for women.

Medicaid Issues for Women

Since women tend to live longer than men, they make up the majority of nursing home residents. Planning to protect assets, especially the family's home, from being lost to the costs of long-term care, is essential. Medicaid Asset Protection Trusts (MAPT's) should be into place when a husband dies. While the home was exempt from Medicaid while the spouse was living, it becomes an available resource, required to be “spent down” if a single person requires long-term care.

What if it is a second marriage and the couple has executed a pre-nuptial agreement? Many are surprised to learn that they are financially responsible for the cost of their husband's care despite the prenuptial agreement. Medicaid is not bound by that agreement and considers the combined assets of the couple to be available for the care of the ill spouse, regardless of whose name those assets are in. Before contemplating a second marriage later in life, especially where the man is older, a woman should determine whether her intended has long-term care insurance or, if not, is willing and able to purchase that insurance so that her assets are protected. If he is unable or unwilling to purchase long-term care insurance, she should seriously consider setting up a MAPT for herself to protect her assets.

Women's Role as Caregivers

Fair or not, women tend to care for their aging parents far more often than men. What if a woman has to take unpaid leave from employment for this purpose? Caregiver Agreements are designed to compensate the daughter for the job of caring and sometimes boarding her aging parents. Consideration should be given to having siblings agree to the terms of the agreement to avoid misunderstandings later on. There may be the need for a “lump-sum” distribution to the daughter to improve her home or put an addition on for the parents to reside in. The parents may wish to acquire life rights to stay in that home in exchange for the lump sum. Discussion should occur as to whether some or all of the lump sum will be considered a gift to be subtracted out of the daughter's share of the inheritance.

Where the responsibility lies with the daughter caregiver, we recommend that she be named as the agent under the parent's power of attorney as well as the agent for medical decisions under the health care proxy and/or living will. Wherever possible, we advise against these powers residing with a sibling who lives far away. It is difficult for the daughter who bears the bulk of the responsibility not to have the powers to adequately discharge that responsibility, not to mention the annoyance of being second-guessed by a sibling who is not there day-to-day to see what is going on.

Medicaid Asset Protection Trust planning should also be considered for the parents at this time. Even the strongest and most well intentioned caregiver may ultimately find themselves overwhelmed and unable to cope with the burden of caregiving. Other risks for the caregiver may be (1) a health issue or other crisis that arises for her or a member of her family, or (2) the parent requiring a level of skilled care that is beyond the daughter's ability to provide. In the foregoing situations, a nursing home stay may become inevitable. The daughter should take all steps from the very beginning to protect assets since, being in charge, she will later be answerable to her siblings for the actions she may or may not have taken.  Here, reliance on the elder law attorney's advice may well insulate her from later claims.