Our Approach to Asset Protection and the Reasons Why
The most common goals we hear from our clients are that they want to:
Maintain control of their property
Not become a burden to their loved ones, and
Keep their plan simple
We have been working with clients for more than 30 years. When I looked back over the history of my practice, I analyzed what it was that clients most often wanted us to help them accomplish. I discovered that there are about 10 to 15 things that are really important to our clients. When we looked at why those things were important to them, we realized that their concerns were a response to seven (7) basic threats.
The Seven Threats
- Loss of Control. People naturally want to maintain control over their assets, their stuff. And the loss of control always happens when we least expect it. So for us, as planners, we want our clients to know how that happens now, not when they need it and solutions are no longer possible.
- Not Knowing the Law. Most of us know some of the law. We gently ask where our clients got their law degrees. The answer is, from friends and family. The beauty shop. The coffee shop. At work. Someone tells you that their cousin’s brother’s uncle three times removed lost everything to the nursing home and, if he’d only done X or Y, he would have been fine. It’s not what you know that’s the problem. It’s what you don’t know, and how much of what you do know is incorrect, that’s the problem.
- Not Knowing Who Your Predators Are. We know you are aware of who some of your predators are, but those accidental predators are the ones that are often overlooked. These accidental predators may be family, fighting over money. You should expect your attorney to identify threats you never even considered.
- Failing Health. We naturally resist planning for unexpected illness or accidents. None of us plans to have a stroke one day or die in an automobile accident. But most of us know people who have died unexpectedly.
- Failing to Plan When You Can. There are two types of planning in my world. There is vertical planning, by people who are well and moving about. And there is horizontal planning, and I think you know what horizontal planning would be. Vertical planning is good. But some day, stuff is going to happen and we are all going to be horizontal, and then it will be too late to plan.
- Not Working With Qualified Professionals. How do you know a financial advisor, accountant, or lawyer is qualified? It’s not always easy, but there is one rule of thumb I follow. Does the person focus on the issues that matter to me every day? Or, if I asked, would he or she say, “Oh yeah, we do that, too.” We do that, too, is the same as saying something is just okay. Okay is not good enough.
- Not Knowing the Cost. We naturally tend to focus on the raw cost of a good or service. We forget that cost is a function of value. In our firm, cost is irrelevant. We have low cost plans, medium cost plans, and high cost plans. The real question is why would you spend more money, or less. What are you spending it for? What is it that you want your investment of money to accomplish for you? At Breshears Law, we have honest conversations about the real cost of plans, and the value of the different types of plans.
If you want to learn more about a simple way to protect your assets and avoid being a burden to your family, Click Here to schedule a Vision Meeting with our estate planning attorney.
Real Life Examples
I met with a client the other day, who was lamenting that we hadn’t met in time to help his folks. His mom and dad fell ill unexpectedly and ended up in a nursing home. Two years later, all their money was gone. He was upset, and so was I, because it didn’t have to happen that way.
The cost of long-term care for disabled persons continues to rise. We recognize that many of our clients are concerned about how they will be able to withstand the financial impact of long-term disability without completely exhausting their life savings. Most people have been told that in order to receive Medicaid assistance with long-term care, they will have to give away or spend themselves into poverty. Those statements are most often made by people (even some attorneys) who don’t understand the complexities of Medicaid law and the requirements to qualify.
The math involving long-term care is eye-opening. If you or your spouse need full-time residential care, the cost can easily exceed $6,000 per month. That’s $72,000 every year. Adding a $72,000 expense to a household budget is not something most of us are equipped to do.
To generate $72,000 a year from investment income, for example, would required at least $1.8 million in investable assets generating at least a 4% return. For those who have less than $1.8 million in stocks, bonds, or mutual funds, self-paying for long-term care may not be realistic, at least for long.
Medicaid law and the accompanying regulations are complex, but we work with clients every day to protect assets that may otherwise be at risk from being depleted by the cost of long-term nursing care. When can you qualify for Medicaid depends to a great degree on whether you work with a qualified estate planning attorney, and whether you plan in time.
How long are you going to live?
I had another client in recently whose financial advisor recommended years ago that he and his wife plan for the cost of long-term care. Years later, his wife has been diagnosed with a memory disorder and the need for a full-time memory care is looming on the horizon. Long-term care insurance is no longer an option. We can still help them protect a significant percentage of their assets, but because they waited too long the financial benefits of planning are unlikely to be as favorable for them.
Another family are frustrated because their mother needs a nursing home now. She is 96. We originally met with them when she was 90, and discussed doing asset protection planning. They said, “No, she won’t live five years.” Had they done the planning when we first met, she would be all done. One hundred percent of her assets would have been protected and she would be qualified for Medicaid.