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Asset Protection

Posted by Bridget Murray | Apr 16, 2019 | 0 Comments

My partner, Ray Cannon, created the chronicles of Dick and Jane to help clients understand some of the intricacies of estate planning and elder law.  With thanks and appreciation for his sense of humor and legal skills, we bring you the 2019 life of Dick and Jane.


Jane called to inform me that her mom, institutionalized for many years with Alzheimer's, has finally succumbed to the disease. She is concerned that her father, who has been living alone and who has visited his wife every day will have nothing to keep him occupied. Her father downsized several years ago and moved into an over 55 community. He has made few friends there and Jane wants him to move in with them. Jane's father is in very good health and is in favor of moving in with Dick and Jane.

From an asset protection standpoint, Jane's father has some choices. He can sell his home and keep all of the proceeds so that if he needs in-home care he will have the funds to pay for it; he can sell the home and transfer the proceeds to Jane, which is a disqualifying transfer (which carries with it a five-year look-back) for Medicaid purposes. These assets, of course, will not be available to Jane until the expiration of the five year look-back period. Finally, he could purchase a life estate in Jane's home which would be a purchase for value and so would not be a disqualifying transfer.  This is the more complex option and would require work to be sure that the payment and documentation would reflect the true value of the life estate.  It would also make Jane's father a partial owner of the house, which may or may not be a good solution from Dick and Jane's perspective. Jane's father decided that he would transfer the proceeds to Jane.  

What are the risks? If Jane puts the monies into an account in her name penciling dad's name on the passbook, and then dies, those funds would end up passing through Jane's estate. If Jane's dad needed the funds, it would be problematic to get them back from Jane's heirs. The better course would be for Jane to set up a trust in her name so that if her father needed nursing home care during the five year period she could “cure” the disqualifying transfer by giving the money back to him.

LESSON: As a rule, parents want to leave something to their loved ones. With advancing age, it may make sense to transfer the assets before death so that those assets are not used for nursing home care. A nursing home can cost more than $144,000 per year; even a short stay can wipe out a person's lifetime savings.

About the Author

Bridget Murray

Attorney at Law, Principal Attorney Murray has been practicing in the area of Estate Planning for 20 years. Prior to becoming an attorney, she wrote for The Economist in Tokyo, worked as a financial analyst for State Street Bank, and earned an MBA in International Management (Thunderbird School ...


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