Asset Protection Planning for Married Couples

The planning discussed in this article is for married couples when one spouse needs long-term care now or is likely to need it within the next five years. “Long-term care” means care in a nursing home, residential care/assisted living setting, or in the couple’s own home. The goal is to protect assets for the healthy spouse and avoid spending the couple’s life savings on long-term care. This can be accomplished by accessing MaineCare long-term care benefits for the spouse needing care.

Qualifying for MaineCare

MaineCare Applicant

To qualify for MaineCare long-term care benefits, the spouse applying for benefits must have less than $10,000 in countable assets. Some assets are not counted toward this limit. Common examples include the primary residence, one vehicle, household goods and personal belongings, and prepaid funeral and burial services.

Healthy Spouse

The healthy spouse is allowed to keep additional assets. For benefits covering in-home care or residential care/assisted living, the healthy spouse may keep unlimited assets. For nursing home benefits, the healthy spouse may keep countable assets up to the community spouse resource allowance which is $162,660 in 2026.

Retitling Assets to Healthy Spouse

A common first step is to change ownership of most countable assets to the healthy spouse’s individual name. For in-home care or residential care, this may be all that is needed to qualify for MaineCare benefits. For nursing home care, additional planning is necessary if the healthy spouse’s assets exceed the community spouse resource allowance.

Healthy Spouse’s Estate Plan

After these steps are taken, most assets will be owned by the healthy spouse only. That makes the healthy spouse’s estate plan especially important. What happens if the healthy spouse unexpectedly dies before the MaineCare spouse?

Problem 1: Loss of MaineCare Eligibility

If the healthy spouse dies first and the MaineCare spouse inherits everything, the MaineCare spouse will be over the $10,000 asset limit and will lose benefits. And there are rules that prevent the healthy spouse from “skipping” the MaineCare spouse as a beneficiary completely.

Problem 2: Estate Recovery

Estate recovery is the process by which the State of Maine gets paid back for MaineCare benefits paid during a person’s lifetime. If noncountable assets—such as the family home—remain in the MaineCare spouse’s name, they may be subject to estate recovery after death.

The Solution

A coordinated estate plan can help protect assets if the healthy spouse dies first. That plan may include:

• Removing the MaineCare spouse’s name from noncountable assets (like the home). Although the MaineCare spouse can own these assets without affecting eligibility, keeping ownership of those assets increases the risk of estate recovery.
• Preparing a new Will for the healthy spouse that leaves the estate to a supplemental needs trust for the MaineCare spouse instead of outright.
• Updating beneficiary designations on retirement accounts, life insurance, and other accounts owned by the healthy spouse so that they name the trust rather than the MaineCare spouse directly.

The trust for the MaineCare spouse is testamentary, meaning it is created by the healthy spouse’s Will. It comes into existence only if the healthy spouse dies before the MaineCare spouse. If the MaineCare spouse dies first, the trust is never funded.

The trust can pay for goods and services that improve the MaineCare spouse’s quality of life, but it generally cannot be used to pay for long-term care expenses that MaineCare would otherwise cover. Assets held in the trust do not count toward the MaineCare asset limit and are protected from estate recovery.

When Should This Planning Be Done?

This planning can be completed at the time one spouse applies for MaineCare. Transfers between spouses are not subject to the five-year lookback rule, so these steps do not have to be completed in advance.

However, waiting too long can be a risk. If the healthy spouse dies unexpectedly before the planning is completed, the opportunity to protect assets through this strategy is lost.

This planning is typically started when there is a reason to expect that one spouse may need long-term care in the foreseeable future—and usually not just because of age. Examples include a diagnosis of dementia or Alzheimer’s disease, Parkinson’s disease, multiple sclerosis (MS), a significant stroke, or the presence of other progressive conditions or physical limitations that are likely to require long-term care.

Important Note

As with most legal planning tools and strategies, there are many exceptions and variations to the standard planning described in this article. While this article generally outlines a commonly used strategy, it will not apply exactly the same for all families and situations. We strongly encourage meeting with an elder law attorney to discuss your family’s unique circumstances rather than solely relying on the information provided here.

7/31/26