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Asset Protection Trusts

On average, the cost of nursing home care in Pennsylvania can exceed $8000 per month which is more than a typical family can afford.  If a retired individual with average savings were to pay privately for nursing home care, their savings would be used up very quickly.

The Medicaid program assists individuals in paying for nursing home care but applicants must first meet specific financial criteria in order to qualify.  If you have saved up more than the Medicaid resource limits, you won’t qualify for Medicaid benefits until your savings are depleted to a specific amount.

In order to protect your savings from being used up by nursing home costs, you can set up an Asset Protection Trust.  An Asset Protection Trust must be prepared by an experienced asset protection attorney and can provide valuable protection for families with high net worth.

A typical Asset Protection Trust is designed to shelter savings or real estate from being consumed before an individual applies for Medicaid.  Here’s how:

Protecting your Home

A home is a common asset to be transferred to an Asset Protection Trust because many of us want to sell and downsize our homes as we age.  In order to avoid the risk that the earnings from the sale of your home will go towards nursing home costs, you can instead pay the proceeds of the sale to your trust.  If you need to downsize to a smaller home, your trust can sell your existing house and then buy a smaller home, which will then also be owned by the trust.

Protecting Your Investments

Investments transferred to your Asset Protection Trust will not be moved from the financial institution where the money is located but the name on the account will change to reflect the name of the trust.  Keep in mind that you must pay taxes on any income that is earned on investments in the trust,

Gifts for Your Children

A great benefit of using an Asset Protection Trust is that it is more protective than outright gifts to your children.  In other words, your children will not own what is transferred to the trust and thus, any risk associated with gifting directly (for example, problems with creditors) are not an issue when assets are transferred.  Your children will only gain ownership of the trust assets after you pass away.

It is important to note that transfers of real estate or savings to your Asset Protection Trust must be made 5 years in advance of needing Medicaid.  In Pennsylvania, assets in a trust after five years are no longer considered available to a Medicaid applicant.

To discuss your specific needs and to find out how our asset protection attorneys can help you, please call Fingeret Law at 412.281.8222 or contact us online.