Many Texas residents and others across the country have trusts established that eliminate the need for probate in the event of death or incapacity. However, these traditional trusts do not provide protection for an estate against creditors either when someone is living or deceased. Some investors are now considering the use of an irrevocable trust to protect themselves and their heirs against high long-term care costs. This type of trust can also prevent loss of non-liquid assets.
The country’s Department of Health and Human Services has reported that the average cost of long-term care is increasing at a high rate. The agency’s study claims that half the people requiring services will need financial assistance to pay for necessary health care. Very few people have the liquid assets needed to cover the cost of long-term care.
While many have homes, land or businesses, there is a lack of cash available. When health care needs arise, these assets must be sold to get funds. Also, a person cannot qualify for assistance from the government until there is only $2,000 left in an account. Therefore, all the hard-earned assets must be liquidated in order to qualify.
Financial experts stress the importance of asset protection planning. While an irrevocable trust cannot be changed or amended, it is a helpful tool in that creditors cannot use assets listed in the trust to satisfy future liabilities. In addition, after a five-year period, the assets will not be counted against someone in the qualification process for government assistance.
Long-term care is a topic that most people avoid discussing. However, making plans to protect assets takes a while to accomplish. A Texas elder law attorney can assist clients in creating plans to protect their hard-earned assets for themselves and their estate.
Source: recordcourier.com, “Understanding asset protection planning”, Cassandra G. Jones, June 3, 2017
