Asset Protection

Estate Planning for Asset Protection

You have worked hard all your life to take care of yourself and your loved ones. Now you do not want to see the assets you have accumulated not be available when you need them. And you want to be able to provide for your loved ones in the future. With careful estate planning, you will be able to maximize the benefits of all your hard work. An estate planning and elder law attorney is a reliable advisor as you set up your financial future.

Making a Will

You want to assure that your assets will be distributed according to your preferences after your death, and your will is an essential document to make your preferences known. If you die intestate, without a will, the court will establish the distribution of your assets, and that decision may not be at all what you were thinking should happen. A legally binding will should include all provisions required by your state, name your intended heirs and the portion of your estate they should inherit, be appropriately signed and witnessed. In addition, you should make sure that copies of the will are readily available to those who will be responsible for your affairs after your death.

Many of our clients have gathered all their relevant important documents into a Peace of Mind Box that is readily available to their trusted family members. You can download our Peace of Mind Box Checklist here.

Establishing a Trust

Having a trust might seem essential in estate planning for the very wealthy, but you don’t have to be a millionaire to benefit from trust planning. A trust is a legal document into which you (the grantor) direct some or all of your assets. It is controlled by a trustee (a second party, or in some instances, even yourself) and the assets are then protected to be used according to the rules of the trust for the welfare of the beneficiary (a third party whom you name, or sometimes, again, for yourself).

Living trusts are established by the grantor when he or she is alive, and testamentary trusts are established through a will and come into effect after the death of the grantor. Trusts may be revocable or irrevocable. A revocable trust may be modified or even terminated by the grantor after it is created. By contrast, an irrevocable trust cannot be changed or discontinued once it is established.

You might choose to set up a revocable trust to direct the use of your assets or income for specific uses. A trust helps you provide for the financial welfare of your family during your lifetime and beyond, it may provide some tax reduction benefits, and it provides clear direction of your assets after your death while avoiding a long and costly probate court process.

A living trust allows you to direct assets for the benefit of yourself and your spouse and provide for your spouse and minor children after your death. Or you might choose to set up a trust for a special purpose, such as the education of your children and grandchildren. If you have a disabled child or dependent, you should consider setting up a special needs trust that will provide for his welfare after your death but will not disqualify him for essential life-saving government benefits. You can find out more about special needs planning and trusts here.

Protect Assets Counted by Medicaid

Nursing home care is extremely expensive – as high as $70,000 per year or more – and beyond a short initial period is not usually covered by Medicare or other insurance. Some people have long-term care insurance, but that coverage can be costly, and you may not qualify because of your age or existing health conditions. Medicaid will cover nursing home costs for those who qualify based on certain medical and financial requirements. Some assets, such as your home and a vehicle, may not be counted in determining your eligibility for Medicaid, but beyond those assets, you may need to “spend down” or reduce your assets. The estate planning and elder law firm of Glenn A. Deig specializes in asset protection for such cases.

Medicaid also has income guidelines. However, it is possible to protect some of your income by using a special irrevocable Qualified Income Trust known as a Miller Trust. Income directed into this trust would be used for your benefit after you become a nursing home patient, for example to pay for Medicare and insurance premiums, medical equipment not covered by insurance, a personal allowance within the limits set by Medicaid, etc. It may even provide some financial support for your spouse. Upon your death, the assets remaining in the Miller Trust would be used first of all to reimburse the state for Medicaid assistance you have received, and then any remaining value in the trust would be paid to the beneficiary you named when you established the trust. You can find additional information about the Miller Trust here.

The estate planning and elder law firm of Glenn A. Deig, Attorney at Law, knows how challenging asset protection planning can be. They stand ready to provide advice and help you structure the legal documents that will best protect you and your loved ones.