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Paul Premack, Express-News Banner

San Antonio Express-News
Copyright 2008, Paul Premack
May 20, 2008

Divorce can End Trust
Medicare is not Medicaid

Dear Mr. Premack: My wife and I created a living trust several years ago for our mutual benefit. We named each other as Cotrustees, and said that when one of us dies the trust continues for the benefit of the other. Various tensions have made our marriage difficult, and I am seriously considering filing for divorce even though we’ve been married nearly fifty years. Even if we got divorced I’d feel responsible for supporting her. Could we just keep the same trust agreement for our finances after the divorce? I can’t live with her, but I won’t stop supporting her. – E.V.

Before you decide to leave your marriage, have you talked to a counselor about the issues creating the tensions? Your idea of continuing to support your wife after a divorce might seem noble to you, but you should not use it as a justification to end your marriage. An effort to resolve your problems might save your marriage.

If divorce becomes inevitable, then your existing trust agreement will have to be examined closely to see if it can continue to meet the goals of both you and your wife. She may decide she would rather receive her share of the estate so she can make her own management decisions in the future.

Texas law was revised a few years ago to specify what happens to a trust when its grantors divorce. First, the law allows the two of you to agree on what you want and to include that outcome in the court’s divorce order. If you agree to continue the trust as-is and the court finds that to be acceptable, the court can order that the trust will continue despite the divorce.

Second, if the court does not order the trust to continue the law requires that any portion of the trust benefitting the spouses is revoked. The trust would no longer serve any of its original purposes, so the trust should be abandoned and new, separate estate plans drawn up for each of you as unmarried persons.

You could, after the divorce is final, decide to create a new trust or a new Will that leaves some assets to support your ex-wife. However, if her divorce attorney represents her well she should receive various assets in the divorce. You’ll have to put the new ownership of resources into your calculations to decide if you still need to or want to provide additional support for your then ex-wife.

Dear Mr. Premack: What is a miller’s trust? How does it affect assets when Medicare and private insurance paid for doctor bills? Does Medicare get all your assets when you die if they paid the doctor bills? – BJF

A Miller Trust is a special arrangement a lawyer can write to comply with Medicaid law. Note that it operates under MedicAID, not Medicare. Almost everyone who qualifies for Social Security automatically gets benefits under Medicare; to get benefits under MedicAID an applicant has to meet very strict federal guidelines.

One MedicAID guideline requires that an applicant’s monthly income be less than $1,911. If income exceeds that monthly amount, under specific circumstances a Miller Trust can be used to legally bypass the limit.

The Medicare program helps pay for hospitalization and doctor expenses. The MedicAID program has many facets, but when a Miller Trust is involved it is focused on paying for nursing home expenses. Medicare does not have any authority to seek reimbursement for expenses from your estate after you die, but MedicAID has MERP (Medicaid Estate Recovery Program) that does, under some circumstances, go after assets in the estate of a deceased MedicAID recipient.

More details on MEPR and on Miller Trusts are on my website.

Prior Column: Probate Notices -&- Retention of Finished Probate Papers
Next Column: Look to Affidavit of Heirship for Answers

Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney.  You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so  this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.


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