Philadelphia Asset Protection Lawyer

Philadelphia Asset Protection Lawyer

The concept of asset protection includes a wide range of strategies someone might employ to safeguard their real estate and personal property. The conversation often includes ways to avoid losses stemming from taxes, claims of creditors, and legal action. However, in the context of estate planning, asset protection is critical for purposes of long-term care. According to the US Census Bureau, the percentage of Americans aged 65 or older grew 34.2 percent over the last decade, driven partly by Baby Boomers growing older. It is estimated that around 70 percent of individuals in this age group will require some form of long-term care, and 1 in 5 of them will need services for more than 5 years. There is a popular misconception that Medicare will step in to defray the costs once you turn 65, but these benefits do not cover long-term care.

Medicaid, the other public health care system established under federal law, does pay designated amounts for nursing homes, assisted living facilities, and in-home services. The problem is that it is a needs-based program, so many individuals will be disqualified for being too “rich.” Asset protection strategies may help overcome this conundrum, and our team at Scott Counsel, P.C. can consult with you on solutions. Please contact us to set up a consultation with a Philadelphia asset protection lawyer today. An overview of the concepts and options may also be useful.

Asset Protection for Medicaid Planning

Monthly costs for a private room at a Pennsylvania nursing home are almost $11,000 and in-home care could reach $4,500 per month. Some insurance policies cover these amounts, but many people will be paying out-of-pocket for long-term care. As a result, they deplete assets over time and might leave little for beneficiaries at death.

Medicaid does cover the costs of these services, including placement in a nursing home or assisted living facility, but only if you qualify under a strict asset and income guidelines. Like many, you might expect that the best way to resolve the problem is to get rid of your assets in such a way that you can still retain their benefits of them. Unfortunately, officials had the foresight to prevent this arrangement by establishing the “lookback” period for Medicaid. In determining eligibility, they will review all transfers you made in the five years before applying. If you gave away items or sell them under fair market value during this period, these assets are considered as being owned by you. Worse, there are penalties for attempting to sidestep Medicaid rules.

Therefore, asset protection in the context of Medicaid planning aims to balance four objectives:

1. Make lawful transfers to “spend down” your net worth;
2. Comply with Medicaid’s rule on the five-year lookback;
3. Shield assets from being included in establishing your net worth; and
4. Protect against Medicaid estate recovery, in which officials will try to get reimbursement after your passing.

Asset Protection Strategies for Long-Term Care

There are multiple options for achieving some or all of the above goals, and one of the most effective is a Medicaid Asset Protection Trust (MAPT). This structure is created as an irrevocable trust, so the grantor that creates it has no control over distributions or management. Thus, when assessing eligibility for Medicaid, assets in the MAPT are excluded. Keep in mind that the lookback rule DOES apply, so a MAPT is most useful for individuals who do not expect to be applying for Medicaid in the next five years.

Additional asset protection options for Medicaid planning include:

• Irrevocable Funeral Trusts: This structure allows you to put funds in a trust to pay for funeral and burial costs in advance of death. This type of irrevocable trust does NOT violate the lookback rule, enabling you to spend down your estate without penalties. In addition, you can create an irrevocable funeral trust for a spouse and children, further spending down your estate.
• Home Protection Trust: By placing your home in an irrevocable trust, you can remove it from being considered for Medicaid eligibility. A home protection trust can also be used to shield your residence if and when officials pursue Medicaid estate recovery to get reimbursement for the costs expended to provide you with long-term care.
• Caregiver Agreements: Many families are in the position to provide personal care for a loved one, and there are advantages to crafting a contract that establishes the details. When a person applies for Medicaid, any amounts paid under a caregiver agreement are not considered gifts that violate the lookback rule. At the same time, the individual is spending down his or her estate. The key is creating a solid personal care contract since officials will intensely scrutinize the arrangement.
• Medicaid Compliant Annuities: With this option, you turn over a lump sum of cash to an insurance company with no option to cancel or cash in. The company then pays you back in installments, essentially turning the amount into a monthly income stream.

Questions to Ask a Philadelphia Asset Protection Attorney

Though this overview provides a general description, you will need additional details to understand your options and determine your strategy. The team at Scott Counsel, P.C. is prepared to provide information and answer your questions, such as:

• What assets can be placed in a Medicaid asset protection trust?
• Who should I name as a trustee for a MAPT?
• How does the gift tax exemption affect lifetime gifting for purposes of Medicaid?
• What services are considered long-term care?
• Does a caregiver or personal care agreement need to be in writing?
• What is the asset and income threshold for Medicaid?
• How does estate recovery work if my spouse survives me?

A Philadelphia Asset ProtectionLawyer Will Advise You on Strategies

This summary helps explain the key points, but you will need skilled legal counsel to guide you and develop an appropriate plan for asset protection. For more information, please contact Scott Counsel, P.C. by calling (856) 485-4585 or checking us out online. You can schedule a consultation with a Pennsylvania asset protection attorney to discuss options.