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PRENUPTIAL AGREEMENTS, SECOND MARRIAGES AND MEDICAL COSTS

David Silver teaches The Legal Environment of Business in ECU's Department of Finance. Dave is also a Partner with The Graham.Nuckolls.Conner Law Firm in Greenville, specializing in Elder Law

When two people at or near retirement age decide to marry, it is often important to them (and especially to their kids) that the assets that they have accumulated from their prior marriages will be passed to their own children, and not to the new spouse or their children. Both parties usually do not want, nor intend, that their spouse's money will be used for their own support. These couples often sign prenuptial agreements with the expectation that their separate assets will be preserved for their own children. To their great dismay, these couples and their families often discover that prenuptial agreements do not protect assets from many medical bills.

Under North Carolina common law, the Doctrine of Necessaries makes a spouse liable for necessary medical costs incurred by their husband or wife. A prenuptial agreement will not protect a spouse's assets from a subsequent collection action. Fortunately, this danger can be mitigated by making sure each spouse has health insurance or is covered by Medicare.

A much more difficult issue to deal with is long term care, which is not covered by health insurance or by Medicare. The average cost of care at a skilled nursing facility ("nursing home") in North Carolina is $6,300 per month. Medicaid is available to help people make up the difference between their income and the cost of care. However, before you qualify for Medicaid, you may only possess a limited amount of assets. Medicaid counts the assets of both the husband and wife regardless of a prenuptial agreement. Therefore, if one spouse should have a stroke and require care at a nursing home, the healthy spouse's assets may have to be used to help pay for the nursing home, regardless of the couple's intentions.

There are ways to protect a person's assets from being subject to depletion in the event of a spouse getting sick, such as use of trusts, life estates and long-term-care insurance. Additionally, each spouse should have a Power of Attorney and Health Care Power of Attorney to designate the person(s) who will make financial and medical decisions for them if they are no longer capable of acting for themselves.

Couples entering into a second marriage later in life would be wise to discuss their mutual expectations with each other and seek legal help to create a plan to obtain the protections that they desire. Inviting their grown children to participate in this process may also help build a level of trust and confidence with their parent's new spouse and family.

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