Yesterday our New York elder law attorney Bonnie Kraham Esq., had another article published in the Times Herald-Record. In the piece Attorney Kraham explains how it is common sense for middle class families to work to protect their assets from long-term care costs. The basic idea behind asset protection for seniors is simple: take advantage of legal tools so that assets can be passed down to children instead of lost to pay for long-term care. The wealthiest families have been using these strategies for decades, but more and more middle class families are coming to appreciate the benefits of protecting assets that have often taken a lifetime to accumulate.
As Attorney Kraham explains in the story, long-term care costs are high everywhere, but they are particularly significant in New York–roughly averaging about $11,000 per month. At the end of the day there are only three ways to pay for those costs: (1) out of one’s own assets; (2) via expensive long-term care insurance; (3) through Medicaid. Few community members can afford long-term care insurance and most only have personal assets to pay for these costs for a limited time. That is why our New York elder law attorneys work with families by using available tools under the law to protect assets in these situations. The goal is to help families receive Medicaid assistance without losing their personal assets in the process.
To accomplish this goal Medicaid Asset Protection Trusts (MAPTs) are often created. Assets are then moved into the trust. Those assets can be protected from being taken to pay for long-term care costs. Government officials specifically designed the system to allow for such planning. For example, there is a five year “look back period” during which the government will evaluate to see if certain asset transfers were made. Those transfers will trigger a penalty period whereby Medicaid payments will be withheld. However, if planning is done beyond that five year window, then all assets can be protected without any such penalty.
A few have questioned the morality of asset protection. It is important to keep these New York elder law asset protection strategies in context. Asset protection measures have been used in various capacities for centuries. Estate taxes are routinely guarded against, and corporations shield personal assets from private ones. It is not be surprising or unfair for middle-class families to use the same strategies to pass on the fruit of their labor to the next generation.
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