Asset Protection Strategies: Overview
A primary goal of many estate plans is protecting your assets so that they can be passed on to your loved ones. This most commonly includes planning to protect assets from estate taxes and the potential future costs of assisted living or long term care.
There are other asset protection considerations that may be applicable as well. For example, if you own investment property, you should consider whether your other assets are protected if you face a liability from that property. Protecting an Asset: Irrevocable TrustsWhether you are looking to protect an asset from long term care costs, estate taxes, or any other liability or risk, an option to consider is an irrevocable trust. This essentially places ownership of the assets in the hands of a trustee, with the trust document outlining the use and distribution of the assets.
Because this removes ownership from you personally, an irrevocable trust can be a good asset protection tool. Some things you need to know about this kind of trust:
Special Considerations for Assisted Living PlanningIf your objective is safeguarding assets from the financial burden of assisted living or long-term care, it's essential to consider the Medicaid and MassHealth "look back" period, which spans five years. Any assets transferred into a trust less than five years before applying for Medicaid will still be considered available to you.
Starting the process too late might jeopardize your asset protection goals. Conversely, initiating it too early may not be suitable, especially if you have substantial financial obligations. Learn more about planning for assisted living. Protecting Other Assets From LiabilitiesAnother benefit of a properly crafted asset protection trust is to separate your liabilities so that all of your assets are not at risk for something that happens relating to one asset.
Generally speaking, if you own a collection of assets they are all (with some exceptions) available for creditors or people with a judgment against you to collect on. That means if you own an apartment building and someone sues for an injury sustained at that property, all of your personal assets could be at risk. If the assets are held separately, however, the risk associated with one asset can be limited to that specific asset. In the example above, if your apartment building is held by a properly drawn trust, the person suing for an injury in that building would only be able to seek recovery against that asset. Provided the documents are done properly, you can hold assets in separate trusts that are revocable or irrevocable. Which is right for you depends on what else you want to accomplish with the trust, and your specific overall circumstances, and should be discussed with a estate planning attorney. |
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Meet Our Estate Planning Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
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