When you plan your estate, you facilitate the asset transfers that will take place after your passing, but there is another consideration. You should take the right steps along the way to preserve your legacy, and this is where asset protection planning enters the picture.
Self-Settled Asset Protection Trusts
If you want to make sure that your assets are protected from future creditors, you could consider the creation of a self-settled asset protection trust. This legal device is alternately referred to as the domestic asset protection trust.
You can potentially use this type of trust to protect all different types of personal property. The assets in the trust would be out of the reach of creditors that come along in the future, but you cannot use the trust to escape current actions.
When you establish a trust, you are called the grantor, and the administrator is the trustee. You would not be able to directly access the assets in the trust, but the trustee could potentially provide distributions.
These trusts are not legal in all states, but you can establish a self-settled asset protection trust in Ohio.
Nursing Home Asset Protection
People usually think about lawsuits when they hear the term “asset protection,” but the term can be applied in another way in the elder law realm. About 35 percent of American seniors will eventually need long-term care, and nursing homes are very expensive.
Medicare will not pay for the custodial care that nursing facilities provide, and you are looking at about $100,000 a year for a room in a nursing home. This is an attention-getting number, and married couples may face two different sets of nursing home bills.
Medicaid covers long-term care, and in fact, most people in nursing homes are enrolled in the program. You cannot qualify for Medicaid if you have significant assets, but you can take steps to divest yourself of resources with future Medicaid eligibility in mind.
Assets that are held by an irrevocable, income-only Medicaid trust would not count if you apply for coverage. You would no longer have access to the principal if you fund this type of trust, but you could receive income that is generated by the assets that are in the trust.
As long as you fund the trust at least five years before you apply for Medicaid, the resources would not be countable.
Asset Protection for Professionals and Small Business Owners
Asset protection is important for small business owners and professionals that are in certain fields. A limited liability company (LLC) is one asset protection structure that is very commonly utilized.
Generally speaking, your personal assets would be protected from business-related legal actions. On the other side of the coin, if you are personally sued, the assets that are owned by the limited liability company would be protected.
A family limited partnership (FLP) is another structure that is used for asset protection purposes. As the name would indicate, the people that comprise the partnership must be members of the same family.
When you establish a family limited partnership, you would be the general partner, and the family members that you bring into the fold would be limited partners.
To explain by way of example, let’s say that you convey an apartment building into an FLP. If someone files a personal injury lawsuit because they are injured in the building, they would be suing the partnership, so property that is owned by the partners would be protected.
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We have provided a broad overview here, and we can drill down to the specific and make recommendations once we understand your situation.
If you are ready to get started, you can schedule an appointment at our Cincinnati, Ohio estate planning office if you call us at 513-721-1513. If you would rather send us a message, fill out our contact form and we will get back in touch with you promptly.