Why estate planning is important for same-sex couples in Oregon

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On March 14, 2016, the definition of marriage under Oregon law was extended to include same-sex couples. Married or not, it is important for same-sex couples to understand their estate planning options. Have you thought about it for your family?

Marriage can have a profound effect on a multitude of legal issues, including inheritance law, eligibility for public benefits, and decision making authority on behalf of an incapacitated partner. Now that same sex marriage is fairly well established in Oregon, same sex couples contemplating marriage need to consider the legal ramifications of taking this step.

Oregon statutes now provide as follows: “Marriage means a marital relationship between two individuals, legally recognized under the laws of this state.”  This is in keeping with US Supreme Court decisions that have held that same sex couples have the constitutional right to marry.  The change in Oregon statutes should give some assurance to same sex couples that their marriages will be recognized in this state even if a future Supreme Court overrules the Obergefell case and ends the constitutional protections for marriage.

Older same sex couples in particular have to consider the effect that marriage will have on their eligibility for Medicaid benefits and liability for their partner’s healthcare and long term care costs.  Some couples may experience significant financial benefits from marriage while others could be harmed.  Here are some things to consider.

Generally speaking, unmarried partners are not responsible for each other’s legal liabilities and health care expenses.  Assets owned by one partner, for example, could not be reached in a lawsuit filed by a hospital or a nursing home to recover unpaid medical expenses incurred by the other partner.  Similarly, the assets owned by an unmarried partner would not be considered in determining the eligibility of the other partner for healthcare benefits under the Medicaid program.  Medicaid helps pay for the cost of nursing homes, memory care facilities or assisting living facilities for individuals who do not have enough assets to pay for their own long term care.

When a couple gets married, this immediately makes each partner legally liable for the uninsured healthcare costs of the other partner – this puts separately held assets at risk.  And, the separately held assets of the partner who does not need long term care are considered to be owned by the partner who does need long term care when evaluating that partner’s eligibility for Medicaid.  This means that the unimpaired spouse could end up having to spend down a significant portion of his or her personal assets before the impaired spouse would qualify for Medicaid.

In spite of this, there are situations where marriage is actually beneficial.  When couples marry, they gain the right to transfer assets from one spouse to another without affecting eligibility for Medicaid.  This right is not available to unmarried couples.  This can be critically important in some cases.  For example, if the partner who needs long term care has more asset than the unimpaired partner, marriage would allow assets to be transferred into the ownership of the unimpaired spouse as an alternative to being spent on long term care costs.  Marriage also gives the unimpaired partner the right to receive support income from the impaired partner after that partner becomes eligible for Medicaid.  This isn’t a right that extends to unmarried couples.

It’s worth noting that a prenuptial agreement between the spouses does not in and of itself protect the separately owned assets of the unimpaired spouse for purposes of Medicaid eligibility.  That said, it usually still is a good idea for older couples to sign a prenuptial agreement before they get married, because this allows the couple to get divorced later on if necessary to protect assets.

These are just a few of the complicated issues that same-sex couples, in particular, older same-sex couples, need to consider before getting married.

Call an attorney at the Law Offices of Nay & Friedenberg to discuss planning for you and your loved ones. We will take the time to understand your needs and craft a plan specific to your unique situation and goals.