Why asset protection planning matters for those with a legacy

Why asset protection planning matters for those with a legacy

| Nov 4, 2020 | Estate Planning

If you have set aside significant amounts of money throughout your life both to provide for your retirement and to pass something on to the next generation, you owe it to yourself and the people you love to preserve that legacy.

Unfortunately, it may only take a few years of declining health to completely consume a lifetime of sacrifice and savings. If you don’t plan ahead of time before you need significant care later in life, you may have to diminish all of your assets before you can receive state benefits.

You may receive care without those benefits, but if you don’t pay everything off, the companies that provided your care can take action against your estate when you die. Asset protection planning is of the utmost importance if you want to pass something on to the next generation.

You may not have insurance protection for the needs of aging

Whether you have a private health insurance plan or Medicare, it’s important to realize that long-term care costs are often not covered by standard insurance or Medicare policies. Unless you have a special long-term care insurance policy, you will either need to pay out of pocket for your costs or qualify for Medicaid.

You will have to almost completely diminish your assets in order to qualify for Medicaid, and any gifts or transfers made in the five years before you apply can count against you for a significant financial penalty. You may need to repay any amount that you gifted or transferred in full before you can start receiving benefits. 

A nursing home could consume your legacy in a few years

In 2018, the cost of a shared room in a nursing home was about $7,500 a month. Inflation and demand will continue to increase the cost of residential care while simultaneously diminishing the purchasing power of the savings you already have. The cost of staying in a nursing home could be six figures a year and quickly consume everything you’ve saved.

Even after you die, if you don’t protect your property now, creditors and Medicaid could come after your estate for everything from your bank account to your home. Asset protection planning makes it harder for creditors or insurance programs like Medicaid to claim your property while also making it easier for you to get the benefits you need. The sooner you get help with this process, the sooner you could potentially qualify for Medicaid in the future without consequences.

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