Should I get a divorce to protect my spouse from debt?

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Q. If you have a medical issue that will certainly lead to death and significant costs, is it wise to legally divorce ahead of your death so that the person dying owns very little beyond their health care coverage to protect assets from the likes of the medical insurance community?
— Trying to plan

A. It depends.

Without knowing all the facts of your situation, it’s hard to say for sure.

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 some medical expenses of a deceased spouse for which the other spouse may be liable, but others for which they may not, said Thomas Roberto, a family law attorney with Adinolfi, Molotsky, Burick & Falkenstein in Haddonfield.

“Whether or not the spouse signed paperwork with the hospital or treating facility can be a factor in determining responsibility for expenses,” he said. “So the nature of the medical debt is relevant, in addition to the amount.”

Whether or not the would-be deceased spouse has a will and the extent of his or her estate is also an important consideration, Roberto said.

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. The applicable statute – N.J.S. 3B:22-2  – lists, in order of priority, the debts to be repaid when the estate assets are insufficient to pay all claims in full, Roberto said.

Medical expenses are not at the top of that list, but rather fifth on the list of seven debts, with the seventh being the catch-all provision for “all other claims,” Roberto said.

“Of course, there are also some concerns about whether this type of Medicaid planning, or Medicaid divorce, raises potential implications of fraud,” he said. “These are all issues which can and should be discussed with counsel in advance.

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This story was originally published on May 16, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.