Articles and Columns

Protecting Assets from Nursing Home Costs

By Carissa Giebel • December 28, 2010

A common question I’m asked is whether there is anything that can be done to protect assets from being potentially lost to the nursing home someday. The answer is almost always “yes.”

What exactly is asset protection? Asset protection is just one component of comprehensive estate planning, with the other components being disability planning and asset transfer planning. Asset protection planning usually involves a combination of various tools and techniques used to meet each person’s unique goals and desires. When determining the best techniques to use, the client’s goals are considered first and foremost. Along with those goals, the following factors are also analyzed: the nature and location of the assets, total net worth, physical health of the client and spouse, risks involved, trustworthiness of children or other beneficiaries, and the willingness to lose control of various assets.

This type of planning is most effective when it’s done before any problems arise. The ideal time to start planning for asset protection is at least five years before nursing home care might become a serious concern. If physical health is a concern and nursing home care might become an issue within the next five years, a different type of planning would be used. If nursing home care is imminent or has already begun, yet a different type of planning would likely be used.

In any of the above situations, it still may be possible to save up to half of the assets. The difference comes in at the price of the planning. Planning before any problems arise is going to cost the least. Planning done right before or sometime after one enters a nursing home is going to cost more. This is because the planning process is more tedious and more difficult. The good news is that the cost is usually a small amount compared to the value of the assets that can be protected.

A common misconception is that if one has already been in the nursing home for a while, it’s too late to do any planning. This is not true. The factors I discussed above are what need to be considered. Regardless of the time already spent in a nursing home, it still may be possible to save a significant amount of assets.

A problem I often see is when a child comes in to discuss asset protection planning for a parent. The child is most often the acting power of attorney for the parent. One of the first things I look at is the power of attorney document. If the parent did not give the child the power to make gifts to do asset protection, and the parent is already incapacitated and unable to sign a new document, then the family is out of luck and no asset protection planning can be done. If asset protection planning is important to you, make sure your documents are updated to give your agent that ability.

Asset protection planning is all about taking your legacy and making responsible, informed decisions on the best planning procedures to meet your goals. To protect your legacy for the next generation, consider planning today to protect your assets.

Carissa Giebel is an estate planning attorney and partner at Legacy Law Group, LLC. She can be contacted at carissa@legacylawllc .com or (920) 560-4651.

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