Asset protection planning

Asset protection planning involves intricate discussions that extend beyond the scope of a single post. Essentially, you can establish a separate entity to hold your assets, and if done correctly, at least five years before applying for government-funded long-term care, these assets are excluded from eligibility determinations. The most common approach is through the use of an irrevocable trust.

For a Medicaid-compliant asset protection trust, you cannot serve as the trustee or beneficiary. Additionally, the trust must be irrevocable and unchangeable once established. The trustee will obtain a separate tax ID number from the IRS, and you will irrevocably gift the assets you wish to protect to the trust. If your home is included, the trust becomes your landlord, and you will pay rent to the trust.

The primary motivation for asset protection planning is to preserve a legacy for the next generation. However, there are significant risks to consider. You might need the transferred assets for your care within the five-year period and may not be able to reclaim them. Furthermore, high-quality facilities often require some private pay, so it’s crucial to have sufficient funds available for your care.

Many clients who inquire about asset protection planning ultimately decide against it due to the potential risks, the importance of accessing quality care if needed, and the necessity of relinquishing all ownership and control over the protected assets.

Do you have question about protecting your assets? Contact us today!