You worked hard for your entire career to put together your financial legacy. The last thing that you want is for that legacy to be consumed by nursing home costs and medical expenses at the end of your life, leaving nothing for your children, grandchildren and other loved ones. There are steps you can take to ensure that you are able to protect and pass on your assets.
Irrevocable trusts
Nursing homes can use legal processes to lay hold of your assets in order to cover the costs of your care, if needed. By creating an irrevocable trust, and transferring all or a significant portion of your wealth to that trust, you can move it out of reach of anyone who would seek to claim it.
This is because, once you transfer your assets to the trust, you no longer legally own or control them. Someone other than you – someone you trust – will be in control of the trust, and can make payments that benefit you and meet your needs, but in most cases the nursing home will be unable to lay claim to the principal in the trust, since it’s legally no longer your property.
Lifetime gifts
Trusts are effective estate planning tools, but they may not be practical for everyone’s situation. Another way that you can ensure that your loved ones receive what you intend for them to have is to begin gifting your wealth while you are still alive.
Massachusetts does not have a gift tax, but there is a federal gift tax. This tax only kicks in if you give above a certain amount, meaning that you may have to spread your gifts out over several years in order to avoid triggering it.
The federal gift tax often changes, so it is important to stay informed of the current rate. As of 2021, you can give up to $15,000 a year per person without incurring the gift tax.
By taking the correct measures now, you can make sure that more of your money and other assets make it into the hands of your loved ones that you leave behind when you are no longer here, even if you go to live in a nursing home.