Asset Protection and Elder Law
What is Asset Protection Planning?
Asset protection planning is the process of making sure that your assets are protected from creditors and do not end up in the hands of people you not want, or never met before.
Deciding to create an asset protection plan requires one to be aware of the fact that lawsuits, either just or not, can be brought by creditors, disgruntled employees/customers and others who claim you are the cause of their injuries.
If a lawsuit against you is brought and won by the accuser, your family and estate could go bankrupt trying to pay off such judgments. A properly crafted asset protection plan would prohibit certain assets from being taken from your estate in order to satisfy a judgment that has been won against you or your spouse.
The key to a solid asset protection plan is that it must be put in place before a suit has been brought. Attempting to shield your assets from judgment after a suit has been brought could be considered an act of fraud, and ultimately could create more difficulties and complications for you, your family and your estate. In fact, the court could even reverse any transfer of assets that are made after a suit has been brought against you.
Asset Protection and the 5 Year Look Back
Protecting your home and other assets from the cost of long-term care generally needs to happen 5 years prior to needing benefits. Medicaid or MassHealth denies benefits for gifts and transfers made fewer than 5 years prior to applying.
Asset Protection Tools
There are quite a few asset protection tools available that can be used to protect or move your assets so they cannot be reached by creditors, including the following.
A trust—When you create a trust, you set up a separate legal entity, which can hold title to property. Once you transfer assets into a trust (provided the trust is not revocable), you no longer have legal title to them, so they cannot be attached by a creditor. You may be a beneficiary of the trust, with an interest that can be subject to a lien, but the property is safe from creditors. A trust can be created by your will as a testamentary trust, or can be set up separately during your life as a living trust. Read more on Trust Definitions.
A homestead declaration—The homestead declaration allows you to protect up to $500,000 of equity in your home from creditors. The homestead declaration will not, however, shield your estate from claims under a mortgage, or against any prior recorded liens. In addition, state, federal and local governments will still be able to file tax liens, and other claims and assessments against the home. In Massachusetts, a homestead does not protect your home from long-term care costs. Read more on Homestead Declaration.
Contact Baker Law Group
To learn more about shielding assets and provide for your protection and care when you are elderly, our experienced elder law and estate planning lawyers can help. We have years of experience protecting the assets for seniors and their families. Don’t risk the loss of all you’ve earned. Contact us today or call our office at 1-800-701-0352 to set up an appointment.