WHAT IS ASSET PROTECTION?
Asset Protection is the practice of law that focuses on arranging a client’s assets to best protect them from future creditors. The strategies used in asset protection vary depending on the type of assets, the family structure, and type of creditor anticipated.
WHO SHOULD ENGAGE IN ASSET PROTECTION?
Certainly, those in high risk professions such as physicians, engineers, and wealthy businessmen should engage in asset protection. In addition, those who do not have sufficient assets or long term care insurance to cover the cost of extended home care, assisted living, or skilled nursing home care, which may be required as a result of a long term illness, should also engage in asset protection.
HOW DOES A PERSON WHO IS NOT WEALTHY AND CANNOT AFFORD LONG TERM CARE INSURANCE PROTECT HIS OR HER ASSETS FROM THE DEVASTATING COST OF CHRONIC ILLNESS?
There are different types of strategies which may be employed depending on how soon a person will need long term care and the type of assets he or she possesses. Since Medicaid pays for long term care when a person qualifies for a specific Medicaid program, it is Medicaid’s rules that are important. If a person transfers his or her assets either to another person or to an Irrevocable Trust, there is a five year look-back. This may be a good strategy if the individual believes that long term care will not be needed for at least five years. If that is not the case, an Elder Law Attorney should be consulted, as the planning becomes more complicated.
WHAT IF LONG TERM CARE IS NOT NEEDED FOR FIVE YEARS?
In cases where long term care is not needed for at least five years or close to it, a “Five Year Trust” might be appropriate. The purpose of this trust is to both protect the assets from the ravages of the cost of long term care after five years and to supplement the cost of a person’s care. Although these trusts are very complicated, they are also very effective. A law firm with a Board Certified Elder Law Attorney specializing in these types of trusts should be consulted.
IF A PERSON NEEDS LONG TERM CARE SOONER THAN FIVE YEARS, IS THERE ANYTHING HE OR SHE CAN DO?
Yes. Under the current law, there are several strategies that work to preserve assets on a crisis basis if long term care is needed. Since the law in this area is constantly changing, a firm with a Board Certified Elder Law Attorney should be consulted to avoid any costly mistakes.
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