The Smithtown asset protection planning lawyers here at our firm address different types of asset protection objectives. Asset protection can be important for business people, and there are individuals that have these concerns as well. Let’s look at some of the different asset protection vehicles that are available to members of the business community and individual citizens.
Family Limited Partnerships
A family limited partnership can be the ideal asset protection structure for some investors, professionals, and business people. The individual that initially establishes a family limited partnership is called the general partner. This person would have sole decision-making authority at all times. Members of the general partner’s family would be named as limited partners.
The best way to explain the value of a family limited partnership is to create a hypothetical scenario. Let’s say that you are a real estate investor, and you own three different apartment buildings. You have significant personal resources as well. It would be possible to convey each property into a separate family limited partnership. If you choose to do so, you can put your home into a different family limited partnership.
One day, someone is injured in one of your apartment buildings. They claim that you are negligent, and they file a lawsuit. The only entity that can be targeted is the family limited partnership that owns the apartment building; all the other property would be out of play, and your own personal property that is in your possession would not be vulnerable. If you have leveraged the property and have very limited equity, there is not much that can be lost.
The asset protection works in the reverse manner as well. If you are personally sued, the properties that are held by these family limited partnerships would be protected. The same thing is true of lawsuits that are aimed at any of the limited partners. In addition to the asset protection angle, family limited partnerships can also facilitate asset transfers between partners at a transfer tax discount.
Limited Liability Companies
Another business structure that can provide asset protection is the limited liability company. When you establish an LLC, generally speaking, your personal assets would be protected if the business was the target of a legal action. The reverse is true as well, but you have to be aware of fraudulent conveyances. If you transfer personal assets to a limited liability company after you become aware of the fact that you are being targeted, it would be a fraudulent conveyance, and this is not legal.
Nursing Home Asset Protection
Now that we have looked at a couple of commonly utilized business asset protection structures, we can move on to personal asset protection. You may assume that Medicare will cover all of your health care expenses when you are old enough to obtain eligibility. In fact, Medicare will not pay for a stay in a nursing home or assisted living community. Most elders will eventually need help with their day-to-day needs, so this is something everyone should take very seriously.
And as we have stated, we are Smithtown asset protection attorneys. On Long Island, a year in a nursing home can cost you over $150,000, and long-term care facilities are very expensive as well. A great deal of money can be lost if you spend considerable time residing in one of these facilities if you have to pay out-of-pocket.
There is a nursing home asset protection strategy that is typically utilized to address this scenario. The Medicaid program will pay for long-term custodial care. You are probably aware of the fact that this government health insurance is only available to people with very limited financial resources, but that does not mean you cannot gain eligibility.
Many people will convey assets into an irrevocable income-only Medicaid trust with future eligibility in mind. The assets would not be counted when Medicaid is determining your status, but you would be able to receive income from the trust before you apply. It is also possible to give direct gifts to your loved ones, but timing is key. You cannot obtain eligibility right away if you give away assets within five years of the submission of your application for Medicaid coverage.
Reserve Your Seminar Seat Today!
Our Smithtown asset protection lawyers are holding a number of seminars over the coming weeks. They are free to attend, but we do ask that you register in advance so that we can reserve your seat. If you are ready to do just that, visit our seminar page and follow the simple instructions.