Estate Planning Asset Protection Basics
When you build an estate plan, you have two goals. The first is to provide for your care in your old age, and the second is to plan for the distribution of your assets to your family, or any other chosen beneficiaries, after you die. The less attached you are to wealth and the less strongly you feel about certain people not getting any of your money, the easier your task in estate planning is. Likewise, estate planning, like divorce, is more complicated the more money you have. In an era where everyone is strapped for money, especially the younger generations, inheriting from you could be your children’s best shot at financial stability. Asset protection measures can help you stop creditors and the state from gobbling up your property before your family can inherit it. For help building asset protection into your estate plan, contact a Bronx estate planning lawyer.
Why Protect Your Assets If You Can’t Take Them With You When You Die?
If you write a will, the probate court follows the instructions in your will to distribute your assets to the designated beneficiaries. If you do not, it follows the laws of intestate succession and conveys your property to your closest surviving relatives. In either case, it only does this after your estate has filed a final tax return on your behalf and settled your outstanding debts with creditors. When the personal representative of your estate opens the estate, it may seem like you died wealthy, but by the time the creditors and the IRS have taken their share, there could be less money left for your heirs. In some cases, your estate might even be insolvent by the time it settles; if that happens, your heirs will inherit nothing.
Establishing a Trust for Asset Protection
Trusts are a non-probate asset. This means that, as far as the probate court is concerned, they are not part of your estate. A trust is a separate legal entity, like a business that you own; therefore, its property does not legally count as your property. You can transfer money and real estate to a trust. In the trust instrument, you can indicate that the trust should begin making payments to the beneficiaries after you die, or even while you are still alive.
The Medicaid Five Year Lookback Rule
If you enter a nursing home as a Medicaid beneficiary, Medicaid will pay itself back out of your estate after you die. That means that it can seize your house, where your family continued living while you were in the nursing home, plus any money your family would have inherited. Setting up a trust and transferring property to it right before you move into a nursing home will work. Medicaid can help itself to anything you owned during the last five years before you entered the nursing home.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can answer your questions about asset protection for estate planning. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
vox.com/money/24080062/retirement-age-baby-boomers-older-workers
