While divorce rates for younger Americans have fallen in the past 40 years, the rate of divorce among baby boomers began to climb in the 1970s and doubled between 1990 and 2012.1
The “leading edge” of baby boomers were born in 1945, and the baby boom ended in the late 1960s. This means that the oldest boomers are now 73 and almost all are in their 50s.
Disability rates rise as people age, with about 28 percent of people defined as disabled within the two years before death for those who die after age 50.2
Since many family law litigants choose to go without counsel (see Susan Hansen’s article “Family Lawyers: Are We Becoming Obsolete?” in this blog, Dec. 7, 2017), we need to be relevant to assist clients and add value to the divorce process.
One way to do that is to offer advice that provides something more than an analysis of support and property division issues raised by a divorce for couples whose children have grown up. Knowledge of elder law offers that added value. It permits the attorney to spot issues that may be unique to older adults, and to offer options to deal with those issues before, during, and after the divorce.
What Issues May Be Unique To an Elderly Divorce Client?
Older clients are worried about retirement and the possible need for long-term care as they age. We can assist them by understanding the programs that may help them to navigate these challenges with greater financial security.
For example, a couple where the husband has been the primary wage earner and his wife is disabled may benefit by an application for Social Security Disability benefits or, if the wife does not have enough work history, an application for Supplemental Security Income.
These programs provide some financial support, but more importantly, they provide health insurance either through Medicare or Medicaid. When the monthly benefit payment is combined with the savings from not paying a monthly insurance premium (or a nominal one), this may provide the couple with thousands of dollars of savings to put toward their monthly budgets, which may resolve support issues more easily.
Preserving Assets: Divorce May Not Be Required
Many couples who worry about payment for long-term care for a frail spouse and consider divorce as an option to “preserve” assets. Sometimes, divorce is the best option, but in other cases, it may be better financially to stay married and take advantage of the benefits programs available to help pay for nursing home, group home, or in-home care.
If an elderly husband is disabled and needs long-term care, and the couple is worried about how to pay for that care, they can consider a variety of planning options either before or after divorce to pay for that care through the Medicaid (Title 19) program. Although Title 19 is generally a poverty program, the rules are surprisingly generous for married couples who apply. They permit the couple to keep all of the retirement assets in the name of the “healthy” spouse, a home, a car, and a maximum of about $125,600 in liquid assets, depending on the couple’s assets at the time one of them needs long-term care.
If the couple applies for Title 19 and is approved for the ill spouse, who then gets his nursing home paid for, they could choose to divorce after that, and have the assets protected in a number of ways.
First, if the husband receives half or perhaps some lesser amount of assets in light of the fact that his care will be paid for by Title 19, he can put his share of assets into a special needs trust that is not counted in his assets for public benefits, such as a trust under WISpact.
Such a trust can pay for items for the husband that Title 19 would not pay for. However, there is a “payback” requirement in such trusts, meaning the State of Wisconsin must be paid back for benefits it has paid if any assets remain in the Trust when the person dies.
Second, the parties can often get court approval for an unequal division of property in the healthy spouse’s favor so that she can preserve the assets and pass them to the parties’ children, if that is the couple’s desire. Such a process can avoid estate recovery (the state’s right to be paid back for benefits) if the proper steps are taken. Couples must be cautioned that payback can occur, if they do not plan properly.
Planning After a Divorce
Finally, ensuring that the parties have the needed powers of attorney for health care and finances will permit them to do needed planning even after a divorce.
This should be discussed with the client and a well-informed attorney can draft these as part of the divorce plan, provided that the attorney is knowledgeable about what powers to include that permit long-term care planning, such as a gifting power, the ability to declare “intent to return home,” and an ability to apply for public benefits, among others.
Two Closely Related Practices
Family law and elder law have many overlapping issues. We help individuals transition assets and income, often at a time of crisis.
If family lawyers have a working knowledge of elder law, they can provide more comprehensive services to their clients and remain a key advisor to the client at a time when clients do not always recognize the value that a lawyer adds to the process.
Margaret Hickey currently serves on the board of directors of both the Family Law and Elder Law sections of the State Bar of Wisconsin.
Endnotes
1 “Boomers are Making Sure the Divorces Keep Coming,” Bloomberg, June 17, 2016.
2“High Disability Rates Persist in Old Age,” July 8, 2013; “Aging U.S. Baby Boomers Face More Disability”, March 2013.
This article was originally published on the State Bar of Wisconsin’s Family Law Section Blog. Visit the State Bar sections or the Family Law Section web pages to learn more about the benefits of section membership.
