Have you ever heard that you should give your home or property to your kids to protect it from the nursing home?
If the thought concerns you that you may someday lose your home or your savings because you need long-term care or nursing home care, you should know your options. Contrary to what you may have heard, you do NOT have to give your house or other assets to your children to protect them – there are other legal options available.
Proper planning for long-term care involves arranging your assets in a way that protects some or all of your assets from the devastating cost of assisted living or nursing home care. Planning of this kind will often involve the use of a special type of deed, an irrevocable trust, or maybe long-term care insurance. This type of planning is most effective when it’s done before any problems arise. The ideal time to start planning for asset protection is at least five years before nursing home care might become a concern.
Setting up an irrevocable trust is often the most effective option to protect assets. After five years, assets funded to a properly drafted and managed irrevocable trust will be considered unavailable if a nursing home stay is required after that. These assets are then preserved for a spouse or loved ones. For example, if real estate is held in an irrevocable trust, the person setting up the trust can ensure the property remains available for their spouse or children.
When assets are gifted directly to children or other loved ones, you lose the control over those assets. Gifting the property directly to the children also subjects the assets to the child’s creditors, lawsuits, or if the child goes through a divorce, the child’s divorce settlement. With an irrevocable trust, you can maintain control of the assets and the property is not subject to the liabilities of the children.
Long-term care insurance is another great way to protect assets, but sadly, not everyone can qualify for a long-term care insurance policy. As a result, an irrevocable trust may be the only alternative. Additionally, most policies do not cover the full cost of care and usually have a short period of coverage.
Proper asset protection planning ensures you, your spouse, and others are cared for if you need long-term care. Impoverishing your spouse and losing your assets can be avoided. Making responsible informed decisions on the best planning options that meet your goals should involve a discussion with an experienced attorney.
Call or email our office to make an appointment to discuss your options.