You shouldn’t have to worry about safeguarding estate assets when you or a loved one needs long-term care — and with advanced planning, you don’t have to. Taking steps now can protect the funds you’ve worked hard for later, as well as help you pay for long-term care if it’s needed.
With the help of a skilled estate planning attorney, you can develop strategies for asset protection with consideration for all future possibilities
5 Tips for Effective Asset Protection
The cost of long-term care is high. Without proper planning, paying for a skilled nursing facility or in-home care can quickly drain your life’s savings.
According to the American Council on Aging, the average cost of a private room in a California nursing home is $146,000 per year. For many Americans, this means that even a single year could drain their financial reserves.
There are several things you can do to protect your financial health after retirement, including applying these five key tips:
1. Buy Long-Term Care Insurance
Long-term care insurance is like health insurance. It helps you cover the costs associated with nursing homes and in-home care. However, insurance won’t meet all your needs.
It’s designed to cover the gap between actual costs and what Medicare will cover. The downside of long-term care insurance is that you won’t receive any refunds if you don’t use it.
2. Give Financial Gifts
Gift-giving is a form of asset protection that benefits you and your beneficiaries. If you have set aside assets for others when you pass, consider giving cash gifts now. This tactic is sometimes referred to as “spending down.” As you lower your net worth by giving estate assets away, you may qualify for more assistance from Medicare.
Speak with an estate attorney or financial advisor for the latest information on gifting limits.
3. Create an Irrevocable Trust
There are many different types of trusts. An irrevocable trust is a legal document that places your assets in an “untouchable” account. Once they have been designated, assets in an irrevocable trust are no longer legally yours.
Instead, they belong to your chosen beneficiaries and are overseen by an independent trustee. Since the properties are no longer considered yours, they don’t count as a resource when applying for Medicaid eligibility.
4. Protect Your Spouse’s Financial Security
The Federal Spousal Impoverishment Act allows one spouse to transfer a portion of their monthly income to the other in a legally protected account. This strategy helps protect one spouse’s economic well-being if the other needs long-term health services.
5. Create a Life Estate
Most people hope to stay in their own homes for as long as possible. A life estate makes it easier to do that if one spouse needs to enter a nursing home. This is because a life estate allows a homeowner to transfer the property to someone else while still living in it.
When you pass away, the property automatically transfers to the appointed beneficiary. Because a home is often the largest estate asset a person owns, a life estate can drastically reduce your financial status and help you qualify for more Medicaid assistance.
Start Planning for Your Future Now
Planning for future needs can be difficult, but putting off this planning can create financial hardship for yourself, your spouse, and your beneficiaries in the future.
If you’re ready to speak with an attorney about protecting your estate assets, turn to a seasoned estate planning lawyer from Heritage Legal, PC in Palm Springs. We take pride in providing our clients with trusted legal guidance and exceptional service. Call today to schedule a free consultation.