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How to Protect Your Assets and Avoid Nursing Home Costs

November 7, 2022

As you age, you may deal with expenses related to healthcare and assisted living. If you're concerned about the possibility of nursing home costs draining your savings and depleting your assets, a Los Angeles estate planning attorney can help you plan ahead and keep them safe. 

Did you know that asset protection is an essential part of any financial plan, especially for seniors? Read on to learn more.

How Much Do Nursing Homes Cost?

Nursing homes and assisted living can add up fast, but just how much does it cost? The answer will vary depending on where you are in the country, the type of care you need, and, of course, individual facilities. 

On average, nursing home care costs anywhere between $7,000 and $9,000 a month—depending on whether you choose a private or shared room. For in-home care, you can expect to spend around $5,000 a month. Assisted living, on the other hand, ranges from $1,700 for part-time care to $4,500 for full-time residents. 

Long-term care is very expensive, and a sudden injury or illness could start to drain your finances. Many seniors need at least a temporary stay in some kind of care facility. 

As you age, these considerations should be an important part of your financial planning. When you plan things out carefully, you can be sure that your home and other important assets are safe even if you need expensive assistance. 

What is Asset Protection?

Your assets include your house, vehicles, bank accounts, investment portfolios, and more.  It includes all the things you might want to pass down to family members.

Shielding your assets can keep them safe from exorbitant taxes, creditors, lawsuits, and medical expenses.

When you face significant expenses, asset protection will keep you from bankruptcy. For seniors, medical expenses are one of the biggest threats to family wealth. By working with a lawyer, you can create a legal strategy that will keep important assets in your possession—that might be your house, a plot of land, or other valuables.

Planning ahead will also protect your children's finances. If they pay for your care, they could end up sinking tens of thousands of dollars into just a few months in a nursing home.

How Can You Protect Your Assets?

Asset protection is useful for anyone who thinks they may face sudden large, unexpected fees. Business owners, for example, use it to protect themselves against the potential for lawsuits. As a senior concerned about nursing home costs, you can use some of the same techniques.

There are many asset protection strategies targeted at seniors and elderly people. Here are some options.

Work With a Legal Professional 

Finding an elder law attorney in Los Angeles is the best way to get started. An experienced professional can give advice that is tailored to your specific finances and goals.

Scheduling a consultation and a few meetings can help you adjust your finances and learn about the best approach to asset protection. 

Planning ahead means that if you find yourself with a serious or chronic medical condition, you can get the assistance you need without going bankrupt. These arrangements will ease the financial burden on yourself, your spouse, and your children. 

Create an Asset Protection Trust

Asset protection trusts are designed to keep your assets safe from creditors. A similar approach is also often used to help seniors qualify for Medicare. This type of trust transfers ownership of your property to a legal entity. 

Once you add assets to this type of trust, they are legally owned by the trust, and the trustee, such as a lawyer or bank, will manage them. Removing your assets from your ownership is beneficial because it means creditors cannot take possession of them. 

A living trust, by contrast, is designed to allow the trust creator access to the assets, as well as the power to add, remove, or manage assets.  Asset protection trusts are irrevocable, meaning that the trust creator cannot make changes after it is created. This inflexibility means that it's important to design your trust carefully.

A trust isn't the best option in all circumstances, but an attorney can help you make a decision based on your own needs, keeping you informed of any risks or downsides to your chosen approach. 

Buy Long-Term Care Insurance

Long-term care insurance specifically covers nursing homes or assisted living costs. This type of insurance will make life much easier if you become disabled or injured. You can put your mind at ease knowing that your nursing home expenses will be covered. 

However, this insurance is another extra cost that may not pay off if you don't end up needing to spend time in a facility. There's always a risk when paying for this kind of insurance. 

You will also have to consider the likely length of your nursing home stay and other factors as you choose coverage. Long-term care insurance is available through the state, employers, and insurance agents.

How Can an Estate Planning Attorney Help?

An estate planning attorney can assess your finances and suggest options that suit your financial circumstances. As a senior, maintaining control over your life and finances is probably important to you and collaborating with a legal expert makes it easy to plan a comfortable life for yourself as you age. 

Whether you want to qualify for Medicare or invest in an insurance policy, your attorney will help you set realistic goals and make them a reality. Estate planning is one of the greatest gifts you can give your family because it simplifies things for them and ensures that your expenses are taken care of.

We are unique because our law firm offers expertise in both legal and financial matters. Our founding attorney has spent years in elder and estate planning law, and he is also a financial consultant. 

If you need expert advice on how to plan ahead for nursing home stays and other age-related expenses, reach out to our team. Schedule a free consultation, you may fill out our online form or contact us at 562-594-4200 at McKenzie Legal & Financial today!

Thomas McKenzie Law
Estate Planning Attorney in California. Full-service law firm specializing in estate plans, wills and trusts, long-term care, and financial consulting. Thomas L. McKenzie received his Juris Doctor degree from Western State University College of Law, in Fullerton, California. While working full-time at night and attending full-time daily classes, Tom graduated law school with honors in 1993.

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