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Please join George and I as we discuss cutting edge techniques that we employ to help our clients protect their assets from the ravages of the aging process. We will discuss proven methods that assist our clients in avoiding the financial devastation that often comes along with a long term illness. Please contact my office to reserve a seat.
The new mantra of the baby boomer generation is beginning to sound something like: “I’m getting older, I’m not in the best of health, I’m worried about the costs of long term care, and I’m scared to death.” This is the kind of stuff that keeps people (including myself) up at night. It’s enough to make you crazy. I wish that I could tell my clients not to worry, that it’s going to be alright, but often times it’s not alright, the effects of aging take over and many people end up in a nursing home and then the financial pain begins. A long term stay in a nursing home can completely exhaust your estate, leaving nothing for your heirs.
The sooner you plan for this possibility the better. Time can be both your worst enemy and your biggest ally, depending on how you approach the problem. Often I am contacted by the families of people who are literally on their way to a nursing home- at this point time is not on their side. Sure, we can preserve some assets but only a fraction. I call this approach the “emergency planning mode.” It is kind of like being on a game show, but the prize is your own “stuff” and you win by getting the privilege of keeping some of your own “stuff.” Emergency Planning Mode is, of course, not the best approach to the problem.
The best time to plan is well in advance of needing nursing home care. Given enough time and proper planning all of your assets can be preserved and sheltered from the costs of nursing home care. Many people utilize irrevocable trusts to protect and preserve assets long term. This is the best option for dodging the nursing home cost bullet, which can be financially devastating for you and your family. Irrevocable trusts are also a great way to avoid probate and to ensure that you can pass something on to your heirs or favorite charity.
If you’re worried about the cost of long term care, get out in front of the problem. Make an appointment with a qualified estate planning attorney and see what can be done to protect your assets. Just because you can’t take it with you doesn’t mean that you have to give it to the nursing home.
If anybody would like to discuss their option, please contact my office for a free estate planning consultation: 203-234-7400. If a one on one with an attorney is too much to start, my firm will be hosting asset protection seminars in October and November, please contact my office to reserve your spot.
Most people know someone who has received care in a skilled nursing facility (Nursing Home). Those same people, however, don’t think that they will ever end up in a Nursing Home.
A long term stay at a nursing home can be financially devastating for you and your family. Nursing home care at the rate of $300+ per day can quickly eliminate a lifetime’s worth of hard work and saving. Long term care in a nursing home can devour your savings and force your home to be sold at a “fire sale” price to pay for your care.
How would a long term stay in a nursing home impact your family and your finances? When faced with a long term stay in a nursing home typically there are three different sources that will pay for the cost. The first option is to have a long term care insurance policy in place. Long term care insurance is the best approach. It will pay for some or all of the expenses associated with long term care in a nursing home. The second option is to pay for the care with your own assets at the private pay rate ($300+ per day). Most people fall into this category, at least until they run out of assets. Once you nearly run out of assets a third option is available, Medicaid.
Medicaid will pay for many, but not all, of your expenses in a nursing home. However, it will start paying nursing home costs only after you have “spent down” your assets. A single individual must “spend down” all assets (including your home) to $1,600 before Medicaid will pay for nursing home care. This wipes out any legacy a person may have wanted to leave to his or her children, grandchildren, church, or favorite charity.
When people are faced with choosing between preserving their assets and paying for their care there really is no choice, unless the costs of long term care in a nursing home are planned for. Giving away your money (to a child, for example) before needing long-term care may sound like a good idea, but it can be risky. Children get divorced, sued, have creditor issues, or can become catastrophically ill. The assets gifted to your child could be lost through divorce, lawsuits, etc. and would not be available to you. Furthermore, due to restrictive gifting laws, you may not qualify for Medicaid because you gave your money away.
An Irrevocable Asset Protection Trust (IAPT) provides an opportunity for individuals, both single and married to protect their assets. These assets could be available to you at sometime in the future to pay for things that Medicaid does not, or for an individual’s spouse or as a legacy for future generations, without the risks associated with giving these assets away to another individual.
An IAPT is a legal entity separate from the person who creates it (the Grantor). It is created by signing a Trust agreement where the Grantor irrevocably transfers assets to a third person called the Trustee (often the Grantor’s children or other relative) who holds that property in Trust for the benefit of the people who are named as beneficiaries.
Timing is extremely important when establishing an IAPT. The name of the game is “Beat the Clock.” In order for an IAPT to work it must be set up well in advance of anticipated nursing home care. After the passage of enough time the assets held by the IAPT will be insulated from the ravages of a long term stay in a nursing home, as well as creditor issues, and lawsuits. Furthermore, the assets held inside of the trust will pass to your beneficiaries probate free and within weeks, as opposed to months if these assets were to pass through the probate process.
And now for the shameless plug:
If you would like to learn more about protecting your assets, Guertin and Guertin, LLC will be hosting informational workshops on this topic on April 29 at 10am and 3pm and on April 30 at 3pm and 6pm. If you would like to attend please call 234-7400 to reserve a seat.
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