Asset Protection in an Uncertain World
Have you protected yourself and your hard earned money from the cost of nursing home care or other long term care needs? How about creditor protection for you or your family?
The biggest fear of middle American modern seniors and baby boomers is running out of money. We can help protect your money and stretch it so you don’t run out of money before you run out of breath.
Whether the “Asset Protection” is so “the nursing home doesn’t take it all”, protecting assets from your creditors and those of your family or avoiding taxes, asset protection is a key part of any Elder Law Estate Plan.
“By failing to prepare, you are preparing to fail” Benjamin Franklin
Elder Law is a very broad area of law that encompasses long term care and estate planning for boomers, seniors and their families. Elder Law also encompasses legal areas such as: Asset Protection, Pre-crisis planning, trust and Estate Planning and long term care planning.
Simple Estate Planning will almost never address these important “lifetime” issues. Elder law attorneys focus on life issues such as planning for incapacity, asset protection, stretching assets to last a lifetime, long term care insurance as well as traditional estate planning issues such as wills, trusts, distribution, protecting heirs etc.
Asset Protection Using Life Insurance, Annuities and Long Term Care Insurance
Let’s face it. Most of our families do not have enough money or insurance to finance their long term care needs. Medicaid rules and laws are tightening and it doesn’t cover much until the patient is in a nursing home. Our other source of funds is Veteran’s Benefits and most people are not entitled. And in order to qualify for Medicaid or Veteran’s benefits we may have to “impoverish” an individual. Often this may not be an option.
Many people are uncomfortable with traditional long term care insurance because of the high premiums, the chance that the premiums will increase and the fact that they may never need the insurance and the premiums would go down the drain.
Most people’s resources cannot stand a “worst case” scenario. However, there is some good news! The Pension Protection Act of 2006 (amended in 2010) allows us to either add, purchase or exchange certain assets for long term care insurance money. These assets include Annuities, Life Insurance, IRA’s and 401ks.
These are called combo or hybrid policies; annuities or life insurance with a long term care insurance rider. These policies typically have death benefits, cash surrender values and long term care benefits. Sales of these policies are surging but don’t wait. Like all long term care insurance, once you develop a debilitating illness, you may be disqualified from coverage. It’s your health that buys this protection.
The paralyzing fear of long term care health costs sends baby boomer and senior Americans into confusion and often denial. Many individuals and couples enter retirement with fingers crossed, unprepared to deal with the biggest potential risk to their savings. Numerous people choose not to purchase traditional long term care insurance because of having to pay costly premiums for the rest of their lives, increasing premiums, and if they never need long term care all the premiums they have paid are forfeited to the insurance company.
There is an alternative way to self-insure and protect your assets from long-term care expenses without paying annual premiums to an insurance company – thereby not worrying about increasing premiums, and forfeiting premiums to an insurance company, instead passing all unused benefits to your heirs’ income tax-free.
This can be accomplished by repositioning a portion of your assets into a specially designed life or annuity/long-term care policy. In addition, you may earn more interest than at a bank without paying current income tax on the interest. This policy will provide comprehensive long-term care benefits for care, such as, expenses at home, in adult day care, at an assisted living facility, and in a nursing home. The policy can be bought on one life or on two lives.
Here’s an example: a husband and wife, 65 years old, both in good health, reposition $150,000 into a specially designed life/long-term care policy. They get an immediate death/long-term care benefit of $325,761, which will grow over time. If either one or both enter a nursing home, or need home health care, each can withdraw up to $6,515 per month tax-free. Any unused benefits will pass on to their heir’s income tax-free. This specially designed life/long-term care policy can help to safeguard the rest of your estate by providing benefits for long-term care expenses. It allows you to retain an asset, and avoid the ongoing liability of annual premiums usually required by other forms of long-term care insurance. So if you don’t use it, you don’t lose it.
You can reposition readily accessible money from CD’s, savings and annuities, even IRA’s. One person’s IRA can provide long-term care protection for both spouses, and help to meet any necessary required minimum distributions, at the same time turning income tax dollars into income tax-free dollars for your beneficiaries. This way, your “rainy day” funds can work more effectively for you in case of long-term care needs, and more effectively transfer your wealth to your beneficiaries.
This type of long term care planning has appealed to thousands of people since it was first introduced and is surging in popularity. Its advantages can help make the assets you have spent a lifetime to build, last a lifetime.
Click here for your Special Report on “Hybrid” or “Legacy” Long term care policies.
Click here for your Special Report on using Irrevocable Trusts for asset protection planning.
Click here for WSJ article called: Long-Term-Care Insurance Isn’t Dead. It’s Now an Estate-Planning Tool
G: Hybrid ltc insurance policies, wall street journal
Please contact our office for a copy of our FREE Book “Don’t Go Broke in a Nursing Home” Co-authored by Alice Reiter Feld for more information on these strategies or set an appointment to come in to talk.
For more information on IRA trusts check out these blogs:
The Problem: I call it “The New Death Tax”
