If you own a home or have bank accounts, you need strategies to protect your assets. Divorce, getting sued, medical bills, and more can eat away at your hard-earned capital. Asset protection strategies are not just for the uber-wealthy. If you work hard, you likely own assets that you don’t want to lose. Let’s look at some asset protection strategies for your estate as you reach retirement age.
Family Changes
Marriage, divorce, or the birth of a child can all bring changes to your financial situation. It is crucial to keep up with who you name as a beneficiary on any:
- Bank Accounts
- Insurance Policies
- 401 K or other Retirement Funds
- Investment Assets
If you write a will but don’t change your beneficiary names to match, your family could argue about who inherits the asset.
For example, let’s say you name your oldest daughter as the beneficiary on your life insurance policy. However, you forget to change your will to reflect your insurance policy. In your will that you drew up 20 years earlier, you named her mother.
If you pass away, your daughter will inherit the life insurance account, but her mother will hear her name as the heir at the reading of the will. The mother may harass the daughter to share the inheritance. This type of situation creates family drama you can easily avoid.
If you go through a divorce (or even consider divorce), it’s essential to keep any significant money inheritances, windfalls, or business income protected from a divorce settlement. Saving money in an irrevocable trust, in a separate bank account named as a business asset for an LLC, or in your retirement accounts should keep it safer should your spouse choose to withdraw the checking account funds and split.
Remarriage
If you go through a spousal change, you can inherit new children. Sometimes the children are already grown, and you never even get to know them. Blended families are complex families. If you each have your own children, you need to discuss your plans for all of the children’s future.
When you remarry, you’ll want to consider all aspects of your financial situation. If you inherit or make money and deposit it into a joint checking account with a new spouse, it automatically belongs half to your new spouse.
Let’s say your spouse remarries after your death. In that case, all of your monetary legacies belong to them. If she divorces him, he could receive half of your assets!
If you die without a plan, your spouse may choose to give their own grown children money and leave yours out. Or your spouse could decide to spend the money all on themselves, leaving nothing for any children.
Making a plan is essential if you have assets and want to direct who they go to. None of us know when a medical event could happen, leaving us incapacitated. Having a plan to protect your assets protects your family.
Long Term Care
If you suffer a medical event that leaves you incapacitated, the cost of nursing home care can eat away your nest egg. If you qualify for Medicaid, it will cover the cost of bare minimum care.
However, if you draw up an irrevocable trust to keep your assets safe, Medicaid will not count them against your eligibility. Because there are strict limits to income and assets to qualify for Medicaid, it’s crucial to shield your assets at least 5 years before you might need long-term care. With 70% of those 65 years old and up needing long-term care for years on end, planning for this time makes sense.
With an irrevocable trust in place 5 years before you need Medicaid, your Medicaid benefits will cover the nursing home care. You can receive what you need or want from the money in your irrevocable Medicaid trust.
Your Legacy
Planning for what will happen to your assets after you die just makes sense. Without a plan, you can lose everything you desired to leave to your heirs. Some of the factors that eat away at your estate include:
NC Medicaid Recovery
If you use Medicaid funds to pay for your stay in a nursing home or assisted living facility, your estate is at risk. Medicaid recovery programs swoop in after you die and demand repayment for what the program spent on your care. You can even lose the family home that you wanted to leave to your children. Discussing ways to prevent the loss of your assets from this program with your attorney makes the most sense. There are ways to mitigate this type of loss.
Probate
Probate is a court process that your family goes through to settle your estate after you die. Your “estate” is just a phrase that means your “assets.” Probate court can take months or even years to settle an estate while draining money from your estate and family.
The judge generally appoints someone to act as an administrator of your estate. If you don’t have a will, probate court operates according to NC Intestate Law. Intestate law gives your assets to family members based on a prescribed formula. You have no say. Your family members have no say.
It’s wise to write up your will and name an executor.
You can also avoid probate entirely for your family by working with your attorney to create a trust. A trust is like a separate business that holds your assets for you. Upon your death, the trustee you appoint distributes the trust assets in the way you described when you first set up the trust framework.
We Can Help
If you have assets you’d like to protect, contact us at Cape Fear Law. Using estate planning tools such as Medicaid asset protection trusts, we help keep your assets safe. We prepare for your future by taking advantage of legal instruments such as power of attorney, last will and testament, a living will, and trusts. Take care of yourself and your family, and leave a legacy to your loved ones someday. Get started with your asset protection planning strategies today.
Contact us and find out how we can help you prepare for the rest of your life!