Growing older can bring a different set of challenges. One of the most significant concerns for older adults is protecting hard-earned assets. As we age, health care costs may continue to rise. Many worry about the potential impact of medical bills on their financial security. Fortunately, legal tools are available to help safeguard assets from medical creditors.
Establishing trusts
Trusts are powerful tools that can shield your assets from medical creditors. An irrevocable trust transfers ownership of assets from the individual to the trust. It effectively removes you from your personal estate and protects your assets from creditors. However, this type of trust cannot be altered or revoked without the beneficiary’s consent, so it’s important to consider this option carefully.
Medicaid planning
Another option is a Medicaid Asset Protection Trust (MAPT). This trust can protect your assets while allowing you to qualify for Medicaid to cover medical expenses. The assets in a MAPT are not counted when determining Medicaid eligibility. While Medicaid has strict asset limits, proper planning can help you qualify for benefits while preserving some assets for your heirs. Setting up this trust requires foresight. You must establish a MAPT five years before applying for Medicaid benefits.
Additional legal documents and power of attorney
In addition to Medicaid and trusts, other legal documents can help protect your assets. A living will, for example, outlines your medical treatment preferences. It can help prevent costly and unwanted medical interventions.
A durable power of attorney grants a trusted person the authority to manage your financial affairs if you become incapacitated. This ensures that someone can make decisions that align with your wishes, protecting your assets from mismanagement or unnecessary depletion.
Importance of legal guidance
The complexities of asset protection can be challenging. Each situation can be unique. What works for one family may not work for yours. To help alleviate these challenges, consider seeking legal guidance from a professional with experience in elder law. They may provide personalized options based on your specific circumstances and help protect your assets in accordance with the law.