A colleague recently wrote an article about the fact that most trust designed for asset protection planning, whether offshore or domestic, don't do anything for asset protection planning. "Neither Domestic Asset Protection Trusts nor Offshore Asset Protection Trusts Work for Medicaid Asset Protection" by Evan Farr.
My first response was "who cares?" Anyone who is creating an offshore or domestic asset protection trust has too much money to be worried about the cost of long-term care or qualifying for Medicaid (MassHealth in Massachusetts) coverage.
But then I thought about turning the question around. Can MassHealth planning trusts also provide asset protection for non-MassHealth purposes? The answer is "yes."
Many of our older clients transfer assets, often their homes, into irrevocable trusts in order to protect the property in the event they need long-term care. After a five-year wait, it permits them to qualify for benefits without having to spend down the assets in trust and, if the protected property is a home, it permits their children to sell the home without the proceeds having to be spent down.
These trusts, if properly drafted, have the added advantage of protecting assets from other risks, especially a lawsuit for any reason. They also avoid probate.
Further, the trusts may be drafted to provide protection for our clients' children and grandchilren from lawsuits, bankruptcy, divorce and early death. When consulting with an elder care attorney about long-term care planning ask if you can include asset protection in the plan.