Estate planning is a process that many people don’t take seriously enough. Although it does involve the creation of the last will, estate planning should also include careful consideration of your future financial and legal circumstances. For example, if you want to leave behind an inheritance to the people you love, you will need to take steps to protect those assets from claims by creditors or the government as you grow older.
Asset protection often involves disbursing assets by giving gifts to family members or creating a trust that ends your direct ownership of assets but not necessarily your control of them. Asset protection can benefit the people you love and also you as an individual.
How asset protection protects you as the testator
One of the primary reasons people have for creating a last will is the desire to leave a specific legacy, often a financial one. If you have significant resources, you may hope to pass those resources on to the people you love for the enrichment of their lives after you die. Unfortunately, the more assets you have, the harder it can be to get certain benefits you may need when you age, such as Medicaid.
A lot of people don’t realize that Medicare doesn’t cover many of the costs associated with aging, such as nursing home rent or the cost of in-house nursing support. You need to be able to qualify for Medicaid or to pay for all of those expenses yourself.
In order to qualify for Medicaid, you need to have planned ahead of time and diminished your assets at least five years prior to your application. Creating and funding a trust with your most significant assets can mean that when you need certain benefits, you know you can receive them.
How asset protection protects your loved ones
When you die, you want to leave something behind for the people you cared about and shared your life with. Unfortunately, without proper planning, the inheritance you intend to leave behind can wind up being nothing more than a burden.
If there are any creditors who could bring claims against your estates, your loved ones, beneficiaries and heirs could wind up spending months and thousands of dollars on the administration of your estate, only to lose the most significant assets you left behind to creditors. Engaging in asset protection now helps ensure that your legacy will remain as you intended, regardless of what resources you require later in life.