Most people never think that they will ever end up in a Nursing Home.  However, the sad reality is that almost half of the population will spend some time in a nursing home during their lifetime.  Currently, the average time spent in a nursing home is 2.5 years

A long term stay at a nursing home can be financially devastating for you and your family.  Connecticut Nursing home care rates of $12,000-$15,000 per month can quickly eliminate a lifetime’s worth of hard work.  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.

When people are faced with choosing between preserving their assets and paying for 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 long term.  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 Irrevocable 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.  “Beat the Clock” is the name of the game.  In order for an IAPT to work it must be set up well in advance of anticipated nursing home care (currently 5 years).  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.

If you would like to learn more about protecting your assets, Guertin and Guertin, LLC offers a free consultation on protecting your assets.  Give us a call at 203-234-7400 to schedule your appointment today.  We also will be hosting informational workshops on this topic and others this fall- be on the lookout for dates and times.  If you’d like to be added to our mailing list (to be notified of future workshops) drop us a line at info@guertinlaw.net.

If you have questions that you’d like answered here, please  email me at marc@guertinlaw.net.

Marc Guertin, is a partner at Guertin and Guertin, LLC, a law firm dedicated to Estate Planning, Elder Law, Trust and Probate Administration.  He is co-author of Planning for the Future:  A Practical Guide to Estate Planning and Avoiding Bad Heir Days. Visit us on the web: http://www.guertinandguertin.com.   Call us at 203-234-7400 for a free consultation. Read Marc’s blog at: http://www.deathslittleinstructionbook.wordpress.com. Guertin and Guertin, LLC is located at 26 Broadway in North Haven, Connecticut