Don't assume you'll be there to pay the bills for your sick spouse.
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Don't assume you'll be there to pay the bills for your sick spouse.(GETTY IMAGES)

Caring for an ill spouse can be exhausting, expensive, and possibly even damaging to your health. Research has shown that caregivers have higher blood pressure and higher levels of depression and anxiety than non-caregivers. Plus, they're less likely to spend time taking care of their own health. A 1999 study in the Journal of the American Medical Association found that people who were caring for a spouse and experiencing strain were at 63% greater risk of death than non-caregivers.

A caregivers death is not only heartbreaking for the family that loses a beloved member; it also creates uncertainty about how the surviving spouse will be cared for. Here are some steps to consider in making sure your spouse gets the care he or she needs if you are no longer living.

Plan early
As the old saying goes, "Hope for the best, plan for the worst." Talk to your family about who will step in to care for your spouse in the event that you pass away or become seriously ill. Who will be responsible for medical decisions? Who will keep track of the finances? What resources will be available to pay for care if you are not providing them yourself?

Make it official
To ensure that there is a seamless legal transition, both you and your spouse should, via powers of attorney, designate an agent who can make health-care and financial decisions on your behalf. (At the same time, you should communicate your wishes in these matters to the person you designate.)

If you die without naming an agent, your children or other family members could face a legal morass. They won't necessarily have the authority to make important financial and medical decisions for your ill spouse. Experts suggest that you review your powers of attorney and any other relevant documents every three to five years. This allows you to reiterate your wishes and, if necessary, take into account any changes that may have occurred in your life, such as a child or other designee who has moved away.

Consider establishing a trust
One of the most important considerations when leaving a spouse behind is how his or her care will be paid for. When one spouse dies, the couples assets ordinarily pass automatically to the surviving spouse, even in the absence of a will. This isnt always a good thing, however. Establishing a living trust—so called because you fund it while youre alive—is one way to avoid the problems that can occur if you let your spouse inherit everything directly.

If your assets pass to your spouse, and he or she has not designated an agent using a power of attorney, a court-appointed guardian will have to be named. If assets—including real estate and bank accounts—are transferred to a trust, on the other hand, a trustee will already be in place and the money will be designated for your spouses care. Using a living trust instead of a will also obviates the need for probate, the often lengthy and costly process by which a court settles an estate (including any disputes over the will).

When you establish a trust, you should name yourself as the trustee and also name a successor to administer the trust if you die or become incapacitated. "If you have the trust set up, and you fund the trust, then the successor trustee can step in much more easily to help the chronically ill person take care of their affairs," says Constance Stone, a certified financial planner with Stepping Stone Financial in Chagrin Falls, Ohio.

Bequeathing your assets directly to your spouse, moreover, can disqualify him or her from government assistance programs. Medicaid, for instance, sets very low asset ceilings for eligibility ($2,000, typically, though it is higher in some states). As long as you fund the trust more than five years before your spouse applies for Medicaid, the trust can hold the assets you leave your spouse without being considered his or her personal property, thereby allowing your spouse to be eligible for Medicaid. "Then the assets in the trust can be used to pay for things other than what Medicaid pays for," says Peter J. Strauss, a partner in the firm of Epstein, Becker & Green P.C. of New York.

Living trusts arent appropriate for everyone, however, and the relevant laws are complex. To learn more about trusts, contact an estate-planning attorney or a certified elder-law attorney. The National Academy of Elder Law Attorneys features a searchable directory on its website.