Asset protection is very important for many people, and it comes in different forms. It is said that we live in a litigious society, and it is possible to position your assets in a safe manner. We will look at the spectrum in this blog post.
Asset Protection for Business Owners and Professionals
If you own a business or professional practice, you may want to take steps to separate your personal property from the actions of your business. For example, let’s say that you are a landlord. Renters and people who visit commercial spaces that you are renting out could potentially get injured on property that you own. Under these circumstances, legal actions may be initiated.
To make sure that your own personal assets are protected, you could use an asset protection structure of some type. One possibility is the family limited partnership.
As the name would suggest, the people in the partnership are all family members. If you establish the family limited partnership, you would be the general partner, and you would add family members to act as limited partners. The general partner is the only partner that has decision-making authority, so you would not be abdicating any power to the limited partners.
You could make the family limited partnership the owner of an apartment building that you have in your possession. If someone was to become injured in the apartment building, your personal property would be protected, because you would no longer own the apartment building. It would be the property of the family limited partnership.
If you own multiple different investment properties, you could choose to convey each respective property into a different family limited partnership. This would add layers of asset protection.
On the other side of the coin, if any member of the partnership is personally sued, the property that is held by the partnership would be protected.
We should touch upon the matter of fraudulent conveyances. You cannot legally establish a limited liability company or a family limited partnership after you find out that you are the target of a legal action. This would be an illegal fraudulent conveyance.
Asset Protection Trusts
It is possible to protect personal assets through the creation of a self-settled asset protection trust. They are not legal in New York, but you could potentially establish one in a different state where they are recognized, like Delaware.
Plus, there is another type of trust that is widely utilized called the revocable living trust. Assets that you convey into this type of trust would not be protected during your life, because you would have the power of revocation.
However, after you pass away, the trust would become irrevocable. Through the inclusion of a spendthrift provision, there would be asset protection for the beneficiaries after your passing.
Nursing Home Asset Protection
When you think about asset protection, you are naturally going to think about lawsuits. However, there is another form of asset protection that is quite relevant to people who may not necessarily care too much about legal actions.
The majority of senior citizens will need living assistance at some point in time, with many of them residing in nursing homes and assisted living communities. These facilities are very expensive, and Medicare does not pay for long-term care. Your assets could potentially be consumed by long-term care costs toward the end of your life.
To prevent this outcome and preserve your legacy, you could implement a nursing home asset protection strategy. You could divest yourself of assets so you can qualify for Medicaid, which is a government program that does pay for long-term care.
This takes careful and informed planning, but if you work with a licensed elder law attorney, you can position your assets wisely with future Medicaid eligibility in mind.
Schedule a Consultation
Our firm can help if you would like to discuss asset protection with a licensed estate planning attorney. To set up a consultation, send us a message through our contact page or call us at 631-265-0599.