Question: My wife, who had been the major breadwinner in our household, had a stroke six months ago at age 68. I had hoped to be able to take her home, but after rehabilitation efforts, the doctors tell me that she has permanent brain damage and that her paralysis will not get better. She can’t swallow, is being tube fed, and can’t communicate. I am 70, have diabetes, and, until I began taking care of her full time, did handyman repair work.

My wife’s income is from Social Security and a pension. My only income is a small Social Security check. During our 44-year marriage, we both worked and put our money together to raise our family and support ourselves. We always put everything in her name --including our home and about $100,000 in savings and CD’s – because we figured she would live longer than me. She has a $230,000 IRA. The only thing in my name is my checking account, which is now down to $500 after paying legal expenses. We both have Medicare and a supplement through her former employer.

Since I now know I can’t take care of her at home, I followed the doctors’ advice and placed her in a nursing home. Since we do not have enough money to pay more than $7,000 per month for her care and still let me live, I decided to file a Medicaid application, but I was told that we have too much money. I went to a lawyer who told me I should transfer all of the assets into my name, but my wife never signed a power of attorney and has no will. I could not get any information from the bank about her account. The only alternative, he said, was for me to become her guardian and seek permission of the court to transfer the assets.

The judge of probate appointed me as her guardian, and appointed a lawyer for my wife who told the judge that since I was in a trust relationship with my wife, I should not be allowed to make any transfers to myself because if I died, our children -- not my wife -- would benefit. This was because two of our three children who have been estranged for years objected to anything coming out of her name.

The judge ruled that I should not transfer assets to myself, but that if I had to sell the house, I could have part of the equity. The judge also approved a budget for me that will come out of my wife’s money, but I will not be able to afford to continue living in the house and have nowhere else to go. My lawyer says that there is nothing else to do. I have spent nearly $7,500 to get to this point. Is there anything I can do to protect my wife and myself as we are both victims here?

Answer: We have had a rash of reader requests for information about topics of this nature of late, but your question points up the complexity of the situation and potential horror stories when adults do not practice “self determination” and sign appropriate powers of attorney and wills. As in your case, children and potentially others can come out of the woodwork to add to your grief. Added to this is the fact that you have a number of remedies about which your lawyer apparently did not apprise you.

First of all, current federal and state Medicaid laws, as well as public policy, allow inter-spousal transfers. We believe that even though you are acting as your wife’s guardian, not to allow you to make the transfers which your wife could have made if she had the capacity to do so discriminates against her as an incapacitated person under the equal protection clauses of the United States and your state constitution.

Federal Medicaid law sets minimum and maximum amounts of countable resources that can be set aside to you (as the spouse in the community) to take care of yourself and still allow your wife (the nursing home spouse) to qualify for Medicaid assistance. Called the "Community Spouse Resource Allowance", each state establishes its own limit within the federal guidelines. This amount does not include the value of the family home and some other non-countable resources.

Since you have an actuarial life expectancy, we don’t think that one can legitimately argue that the transfer of the home plus your state’s spousal resource allowance will provide you with a life of leisure during your last years.

Taking the NextStep: Your dilemma could have been solved had your wife signed a durable power of attorney with spousal gifting provisions. Had she done so, the court proceeding would not have been necessary, and significant dollars and time could have been saved. Next Week: Other remedies.