Elder Asset Protection

Asset protection is a wealth protection strategy that protects an individual’s assets from a variety of potential losses, including creditor claims, long-term care, and taxation. While asset protection can be important at any age or stage of life, it can be essential for aging individuals who have significant assets or who may be at high-risk. As individuals age, the risk of mental or physical decline increases and with such declines, there are opportunities for caregivers, contractors, and others with access to the individual and their assets to engage in elder abuse and fraud. By taking steps to protect their assets before such abuse or fraud can happen, individuals ensure that the wealth they have worked so hard to build remains theirs and can be passed on to their loved ones according to their wishes. At Rhodium Law, we understand that you worked hard to build your wealth, and whether that wealth is just enough to live comfortably and leave a small inheritance for loved ones or enough to live lavishly and ensure that generations to come can also live luxurious lives, you deserve to protect it from high healthcare costs, elder abuse, creditors, lawsuits, and fraud. We stand ready to assist you in putting together an asset protection plan as part of your long-term care planning or estate planning.

Asset protection may protect an individual’s assets from most threats. One of the most common reasons for asset protection is long-term care. When an individual requires long-term care, the cost can be exorbitant. For many, paying for long-term care out of their assets can result in the complete depletion of those assets. With strategies such as restructuring assets or strategic gifting of assets, it is possible to help the individual qualify for Medicaid, which would pay the majority of their long-term care expenses.

Another reason for asset protection is creditors and lawsuits. If an individual finds themselves with a large, unpaid debt or is sued after a car accident or for another reason, their assets may be used to pay the debt or court judgment. In some cases, assets can have a lien attached to them, which prevents the individual from selling the asset without paying the lien. Asset protection strategies may put those assets out of reach of creditors and lawsuit judgments.

Finally, asset protection is beneficial for avoiding elder abuse and fraud. A dishonest caregiver may isolate an individual to gain authority over the individual and their assets so they can steal those assets. A contractor may demand payment for a job they will never complete or a job that has been poorly done. A contractor may also claim to have done work for the individual that was never done and attach a lien to the individual’s home, car, or other asset.

Asset protection is a personalized plan that addresses the potential challenges in an individual’s future and secures their financial future. Protecting an individual’s assets requires implementing measures to preserve those assets and minimize their exposure to the risks that could deplete them. What this specifically means will vary depending on the types of assets the individual has, their lifestyle, their current and expected future health, and the kind of legacy they want to leave for their loved ones.

Asset protection requires putting the individual first. At Rhodium Law, we listen to the individual and get to know them, their needs, and their desires for estate planning, long-term care planning, and asset protection. Our goal is to assist our clients in maintaining their standard of living, being prepared to cover the expenses associated with their future healthcare, and crafting an estate plan that leaves behind a legacy that honors the individual’s life.

The exact measures and strategies utilized to protect an individual’s assets will depend upon the types of assets they have, the lifestyle they live, and other factors. However, a few key strategies are often used to protect senior citizens’ assets. These include irrevocable trusts, Medicaid planning, long-term care insurance, asset repositioning, and life estates.

An irrevocable trust can be one of the most effective asset protection tools available. Unlike a revocable trust, an irrevocable trust cannot be altered or revoked once established. This provides a higher level of protection for the assets in the trust, as it removes them from the individual’s estate. When assets are transferred into the irrevocable trust, they cannot be taken back, and the individual is giving ownership of the assets to the trust, which means that they cannot be considered as part of the individual's assets for Medicaid eligibility purposes, creditor claims, or lawsuit judgments. Though the individual cannot alter or revoke the trust and cannot act as trustee, they can still benefit from the trust and the assets held in it.

Medicaid has strict income and asset limits that can make qualifying for benefits difficult. However, it is often possible to restructure an individual’s assets in a way that allows them to qualify for Medicaid while still preserving as much of their estate as possible. Some asset restructuring options include creating Medicaid-compliant trusts, strategic gifting of assets, and using spend-down techniques to bring assets within the allowed countable assets range. When done properly, individuals can qualify for Medicaid and have the necessary care paid for without using all their assets to do so.

In addition to Medicaid or veteran’s benefits for veterans and their spouses, long-term care insurance is another alternative to paying for long-term care. Medicare and standard private health insurance policies generally do not cover long-term care, but long-term care insurance will provide coverage for in-home care, assisted living care, and nursing home care. This can significantly reduce the burden on the individual’s estate. An elder law attorney can assist the individual with exploring various long-term care insurance options. They can assist the individual with evaluating various factors such as coverages, benefit periods, and premiums to ensure that the client finds a policy that meets both their needs and their budget.

Asset repositioning requires protecting them against potential risks by transferring ownership or changing the asset’s form. This may include transferring assets to family members or creating a family limited partnership to keep the wealth within the family while also protecting it. Asset protection may also include converting countable assets into exempt assets, such as making home improvements or purchasing a new home, to meet Medicaid eligibility requirements. An elder law attorney will get to know the individual’s unique circumstances and their estate before advising them on the most effective asset repositioning strategies for their needs.

An individual’s home can be considered a countable asset for Medicaid eligibility. Additionally, in cases where Medicaid seeks reimbursement after the individual’s death, the house can included in estate recovery claims. A life estate allows an individual to give up ownership of their home by transferring it to one or more heirs while also retaining the right to live in the home for the remainder of their life. This arrangement protects the home from being counted as a countable asset by Medicaid or being included in an estate recovery claim because it means the individual no longer legally owns their home. At the same time, it also provides the individual with the security of knowing they can continue to live in their own home and offer a seamless transfer of property to the individual’s beneficiaries.

A Medicaid Asset Protection Trust (MAPT) is another option that Ohio residents can consider as a way of protecting their assets. MAPTs are a type of irrevocable trust that has a primary goal of holding assets so that Medicaid will not count them when determining an individual’s eligibility for Medicaid. In many ways, a MAPT is no different than any other irrevocable trust. The individual can still benefit from the assets in the MAPT, they can still choose their beneficiaries, and the assets are also still protected from creditors.

However, to function as intended, a MAPT must be created in advance to avoid Ohio Medicaid’s lookback period of five years before the date the individual applied for Medicaid. Additionally, income from a MAPT is part of the individual’s countable assets according to Medicaid rules. MAPTs can also be costly to set up and implement.

A final concern about MAPTs is that their creation relies on the assumption that the individual will be relying on Medicaid to pay for their care. Medicaid does not pay for care in all facilities, however. There are many assisted living facilities that are not licensed as such and therefore cannot accept Medicaid. There are other assisted living facilities and nursing homes that only accept private pay patients. This means if the individual is choosing to rely on Medicaid to pay for care, they may be limiting their care options. Before setting up this type of trust, individuals may want to consult with an elder law attorney to learn about their other payment options before making a final decision.