“Asset Protection” in the context of Elder Law, generally means protecting your assets from the government in the event that long-term care becomes necessary due to injury or illness and saving those assets for the use of the elder and family members. For many people it means qualifying for public benefits, such as the Medi-Cal and Veteran’s Aid and Attendance programs.
While most people know that Medicare and other health insurance will not pay for in-home care, it is a common mistaken belief that Medicare will pay the cost of long-term care in a nursing home. Because of this misunderstanding, many people fail to plan for the cost of such care, either through the purchase of long-term care insurance or the accumulation of adequate savings. With the private pay cost of a skilled nursing facility in the Santa Clara County area of California now over $7,000 per month and the cost of in-home care now typically $20 to $25 per hour, paying for care quickly depletes resources an elder intended to pass on to his or her children. “Asset Protection” for these elders often means protecting their estate, especially their home, for their children as part of a Long-term Care Plan.
At Carney, Sugai and Sudweeks, “Asset Protection” is often also part of a Life Care Plan that first and foremost addresses the long-term care needs and quality of life of the elder. In a Life Care Plan, Asset Protection focuses on protecting the elder’s assets so that loving family members can use them to supplement the elder’s care on public benefits while preserving the assets that are not needed for the elder’s care for the family members’ personal use later.
In cases involving younger disabled persons, “Asset Protection” may mean doing Special Needs Planning in order to protect a gift or inheritance the disabled person would be receiving from parents, grandparents, and other concerned loving relatives. Often the disabled person is on public benefits, such as SSI and Medi-Cal, for which the person must be financially needy to qualify. Unfortunately, the inheritance that was intended to supplement the disabled person’s public benefits will instead usually disqualify the person from his or her benefits until the inheritance is spent down. “Asset Protection” in this case may involve prudent estate planning by the parent or grandparent to leave the disabled person’s inheritance to a third-party Special Needs Trust for his or her benefit, which will protect the public benefits while providing the extras desired.
For the disabled person who already has received an inheritance, “Asset Protection” involves creating a first- party Special Needs Trust (also known as a “d(4)A Special Needs Trust”) to hold the inheritance. It is extremely important that these Special Needs Trusts be drafted carefully to provide both Asset Protection and sufficient flexibility in the use of the trust property for the beneficiary, while not giving the state greater rights under the trust than absolutely necessary. In the case of the first-party Special Needs Trust, there are numerous common trust provisions that, while acceptable in a third-party special needs trust, will disqualify a person for benefits if included in a First-Party Special Needs Trust. Therefore, it is strongly recommended that you contact a lawyer, such as one of the attorneys at Carney, Sugai & Sudweeks, who is experienced and knowledgeable about the laws and rules relating to public benefits for disabled persons when drafting either a first-party or a third-party Special Needs Trust for a disabled person on benefits.
There is also a great deal of misunderstanding about what can be done to Protect Assets in the event of Long-term Care and Disability Planning. As a consequence, many people do things they do not have to do or do things that actually cause ineligibility for public benefits. This is an extremely complex area of the law that very few lawyers know and understand at all and even fewer who know and understand well. As highly qualified and experienced Elder Law attorneys at Carney, Sugai & Sudweeks, LLP, we will educate you on the applicable laws and rules that apply to your case, recommend the best Long-term Care Plan or Special Needs Plan that will legally and ethically accomplish your Asset Protection goals, and then prepare the Trusts, Wills, and other documents on which you can depend.