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Law Offices of Ronald W. Rutz
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November 9, 2001: Nuptial Agreements; Income Qualifications for Medicaid

Q: I know that you have written about this before, but I am still confused about nuptial agreements. Are they really worth the paper that they are printed on?

A: A nuptial agreement merely sets down the legal rights between a husband and a wife involving a possible future divorce and/or death. The document can be done prior to marriage (ante) or after marriage (post).

Traditionally, these nuptial contests took up a lot of Court time, so the Colorado Supreme Court a few years ago set out guidelines that if followed would make these nuptial documents very hard to overturn.

Nuptial agreements were often attacked by arguing that the attorney involved actually was looking out for the interest of the other, that the agreement was not explained to the party from his or her perspective, that the person did not understand parts of the agreement, that the party contesting the document was not given enough time initially to analyze it or was coerced into signing, etc.

In order to "bullet proof" nuptial agreements, the Court advised that it is necessary for each party to retain his or her own attorney. Thus the traditional agreements used to set aside the nuptial agreement would be neutralized.

Yes, it is still legal to use just one attorney but then the traditional avenues to invalidate the nuptial agreement spring to life.

And even though each party trusts the other party, outside factors such as children, creditors, governmental agencies, fiduciaries like a personal representative, etc. can step forward to either one of the parties to pursue a challenge. In fact, one of the foregoing might even begin a challenge as an interested party.

The Court further directed that anything not listed or covered would not be part of the agreement and thus not protected. That is why everything including pensions, insurance, personal property, etc. needs to be listed and a value assigned, thereby omitting the other most used argument that "if I had only known something was worth that much I would never have agreed to give up my possible rights to it".

Space assigned to this column means that other thoughts and topics must be left to another day. But enforceable nuptial agreements are vital in a second marriage not only to insure the trustworthiness of a new spouse, but also to protect that new spouse so that he or she can actually receive what that spouse expected.

Q. In your last column, you said that if a person had an income of more than approximately $1,380 (the figure changes periodically), then he or she would not qualify for Medicaid. I know that is not correct.

A. Actually, we are both correct. Column space limitations prevent a full examination of all the related points, especially in an area as detailed as that covered in the previous column. It is possible to still qualify for benefits, but the cap is the deemed nursing home expense for your area of Colorado. If you have more income than the nursing home expense is deemed to be, you do not qualify. I would guess the rational is that you can afford the cost of the care yourself (even if you are not happy about using your resources) so the government does not need to help.

But if you are in between the income qualification cutoff (let's use $1300) but under the deemed nursing home expense, then you are caught where you can't afford the facility because you do not earn enough to pay for the nursing home yourself, but more than would entitle you to the available benefits.

Thus, if you place your income into a special kind of a trust (Social Services can actually give you the document, or so I have been told), a person can qualify, but of course the income is used to cover the expenses.

It is nice to know that the column is actually read and I welcome comments. I just hope that the columns have proven to be useful.

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