Navigating the intricacies of your financial legacy can be a daunting task. Understanding the nuances…
Probate is the process for administering an estate. If you are married, the last thing you want is to stick your spouse with your medical debt. Good planning will ensure that the spouse will not be saddled with your medical debt in probate.
nj.com’s article asks “Will getting a divorce protect my spouse from my medical debt when I’m dead?” According to the article, the factors to consider include details on the couple’s assets, income and debts, the existence of a will and/or other estate planning documents and the amount and nature of the medical expenses.
There are a few medical expenses of a deceased spouse, for which the other spouse may be liable. The nature of the medical debt is relevant, in addition to the amount, in the Garden State.
In addition, whether the would-be deceased spouse has a will and the extent of his or her estate is also an important factor. If the estate assets are insufficient to pay all debts of the estate in full, it is possible that medical debt may not be paid at all. For example, New Jersey’s applicable statute—N.J.S. 3B:22-2—states the debts in order of priority to be repaid when the estate assets are not enough to pay all claims in full:
- Reasonable funeral expenses;
- Costs and expenses of administration;
- Debts for the reasonable value of services rendered to the decedent by the Office of the Public Guardian for Elderly Adults;
- Debts and taxes with preference under federal law or the laws of New Jersey;
- Reasonable medical and hospital expenses of the last illness of the decedent, including compensation of persons attending him;
- Judgments entered against the decedent according to the priorities of their entries respectively; and then,
- All other claims.
There are also some concerns as to whether this type of Medicaid planning, or Medicaid divorce, may raise potential implications of fraud. Before acting, speak with a knowledgeable estate planning attorney who practices in this area.
Reference: nj.com (May 16, 2019) “Will getting a divorce protect my spouse from my medical debt when I’m dead?”