Posted & filed under Wills.

With rising health care costs and longer life spans, many people with modest wealth have concerns about how they are going to pay for quality care without leaving their families destitute. Asset Protection is not just for the super wealthy when it comes to long term care.

Some of the options you have are 1) Long term care insurance if you are insurable and the premiums are affordable; 2) You can also choose to pay all of the costs of your care and deplete your assets leaving nothing for your family; or 3) Apply for government benefits such as Medicaid and Veterans Benefits.

By moving your assets into an irrevocable trust specifically designed with Medicaid or Veterans Benefits in mind, you can leave some of your estate for your family. These irrevocable trusts should be established by older adults who are willing to give up direct control over their assets while still maintaining control over their income.

An Irrevocable Medicaid Protection Trust is an irrevocable trust that is created for the purpose of protecting any property placed into the trust from (1) having to be spent on nursing home care for the person who created the trust (the Grantor) (2) having the property in the trust count as an asset when the Grantor applies from Medicaid, and (3) having the property placed in the trust be subject to “estate recovery.”  Estate recovery is the process whereby Medicaid looks to be paid back for the care paid by Medicaid from the deceased person’s estate.

Irrevocable Medicaid Protection Trusts work particularly well for protecting real estate.  Other assets such as cash and stocks can also be placed in an Irrevocable Medicaid Protection Trust as well, but it is not as advantageous as putting real estate into the trust.

The Veterans Benefits Asset Protection Trust works in the same way as the Medicaid Asset Protection Trust. There are, of course, different rules and forms involved but the same principals apply to both types of trusts.

Long term care asset protection planning is something that everyone needs to consider and discuss with their financial advisors or estate planning attorneys.