Paying for long-term care can be quite expensive. Since nearly 70 percent of seniors will require some type of assistance during their later years, many people must try to pay for these daunting expenses. Coupled with this issue is the fact that many people require nursing home care for an average of three years. An elder law attorney can help families protect themselves and their assets to better prepare for this stage of life.
One of the strongest ways to protect assets is to purchase necessary insurance. Be sure that you have insurance to cover your assets and to guard against potential lawsuits. There are a variety of business insurance types that can provide safeguards to protect business assets. Likewise, automotive and homeowner’s insurance can protect these assets. Long-term care insurance can help offset the high cost of long-term care.
Create Business Entities
One effective method of asset protection is to establish business entities in order to shield assets. For example, if a person operates a business out of his or her home, this is likely in the form of a sole proprietorship if a separate business entity has not been established. However, a person’s personal assets can be at risk if he or she is sued because of actions involved with the business. An S corporation or limited liability company can provide protection of assets. If the asset is considered part of a separate legal entity, it can avoid Medicaid implications.
Once a business entity has been established, it is important to maintain the corporate veil so that a person cannot pierce it and be able to reach into the business assets in the event of a lawsuit. This is often accomplished by using a different account for the business, using the company name on all documents, titling business property in the name of the business and maintaining corporate records consistently.
Use Available Assets to Decrease Expenses
Before applying for Medicaid, you may need to spend down some of the estate. One way to accomplish this is to pay off debt or other expenses so that your fixed income will go longer. Medicaid eligibility rules often exempt certain property, such as a home or car so that you can purchase the property that you need without having to impact your Medicaid eligibility.
Hold Property as Tenants by the Entirety
Personal property can be titled as tenants by the entirety. If one spouse is sued, the property cannot be used due to the lawsuit. This is because the house is owned in indivisible shares. Therefore, a creditor cannot take just one spouse’s share since it is inherently attached to the other spouse’s share. This protection does not apply when both spouses are subject to a lawsuit.
A trust is a separate legal entity that holds assets. The grantor of the trust orders the trustee to maintain the assets in the trust for the benefit of beneficiaries. The trustee is required to follow the instructions included in the trust document. For asset protection planning, a trustee must usually have the discretion of when to make disbursements in order to avoid a creditor or litigator from being able to reach into the trust assets.
There are a number of different types of trusts, including the following:
- Life insurance trusts
- Asset protection trusts
- Qualified personal residence trust
- Irrevocable trusts
- Revocable trusts
Since trusts are often complicated legal formations, it is important to contact a lawyer who understands and uses trusts on a regular basis. He or she can advise clients on their options.
Elder Law Firm in Maryland
Hammond and Associates elder law attorneys are invested in protecting elders in your community. We can help protect your family or help you navigate your way through a complex legal problem or crisis. Fill out a contact form or call 301-861-4555 to learn more.