Asset Protection Planning for Seniors

While it is always important to focus on how your estate assets will be passed down to loved ones, it is equally important to incorporate tools and strategies in your estate plan that help to protect those assets while you are alive. Asset protection planning should be included in your estate plan throughout your lifetime; however, when you reach your retirement years, you may need to review and revise some of your asset protection planning tools and strategies. To help you better understand that need, the Indianapolis estate planning attorneys at Frank & Kraft explain asset protection planning for seniors.

Is Asset Protection Planning Different for Seniors?

Asset protection should be a consideration in every estate plan, without regard to your age or the size of your estate. Whether you have already amassed a fortune, or you are just starting out, you undoubtedly want to protect the assets you do have at any given point in your life. Seniors face some of the same potential threats to their assets as their younger counterparts; however, as you near your retirement years there are unique threats to your assets that you will need to focus on, requiring a review and likely update to your estate plan. Some of the most common threats to your estate plan as a senior include:

• Elder financial exploitation. Sadly, financial exploitation is at the top of the list of potential threats to a senior’s assets. Each year, there are over 5 million instances of financial exploitation with a senior victim and over 90 percent of the perpetrators are family members. As difficult as it may be to think of family members or other loved ones as a threat to your assets, it is imperative that you do so. People take advantage of seniors in a variety of ways and for a variety of reasons. Sometimes it is because of an underlying addiction problem or because of their own financial struggles. The bottom line, however, is that seniors are disproportionately victimized by financial scams and crimes. With that in mind, it is crucial that you guard yourself and your assets. Do not give anyone access to your bank accounts or other assets. Consult with your attorney if someone asks you to sign a power of attorney. Resist the urge to help everyone who asks you for financial assistance. Never send money to someone you don’t know and always confirm the identity and story of anyone claiming to be calling for a loved one in trouble.
• Long-term care. As you age, the likelihood that you (or a spouse) will need long-term care (LTC) increases dramatically. The cost of that care can threaten your retirement nest egg. Indiana parallels the national average of LTC costs with the average cost of a year coming in at over $100,000 in 2021. Because neither Medicare nor most health insurance plans will cover expenses related to LTC, you may need to qualify for Medicaid. Medicaid, however, imposes both income and asset limits as part of its eligibility guidelines. If the value of your non-exempt assets exceeds the limit ($2,000 in most states), you may have to “spend-down” your assets before Medicaid will find you eligible. Incorporating Medicaid planning into your estate plan early on can prevent the loss of valuable retirement nest egg assets.
• Gift and estate taxes. One of the most potentially devastating threats to your estate assets is the federal gift and estate tax. The tax is effectively a tax on the transfer of wealth that is collected from a taxpayer’s estate after death. The tax applies to the value of all qualifying gifts made during the taxpayer’s lifetime as well as the value of all assets owned by the taxpayer at the time of death. The federal gift and estate tax rate fluctuated historically; however, the American Taxpayer Relief Act (ATRA) of 2012 permanently set the rate at 40 percent. That means your estate could owe almost half its value to Uncle Sam if you failed to plan ahead. Fortunately, tax avoidance strategies can help, starting with the lifetime exemption, which allows you to exempt assets gifted during your lifetime or at the time of your death. In addition, the annual exclusion can also help you to transfer a significant amount of assets each year tax-free. The earlier you implement these strategies the more your estate can benefit from them.

Contact an Indianapolis Asset Protection Planning Attorney

For more information, please join us for one of our FREE seminars. If you have specific questions about asset protection planning for seniors, contact an experienced Indianapolis asset protection planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.

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