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Old 07-21-2012, 09:25 AM
 
Location: Beautiful Upstate NY!
13,819 posts, read 25,165,592 times
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Not sure if this is the best place to post this (just asked admin to possibly create a "Wills and Estate Planning" sub-forum.)

My elderly dad (86) who was living with us in NY for 15 months, has now moved in with my sis in NJ, due to needing full-time care, for which they can provide. Since it had been almost 10 years since his last update to his will (in NY), we took him to an Estate Lawyer in NJ to bring things current. That lawyer is suggesting using an LLC, in which my dad would transfer all his assets, to shield the money/stocks from NJ Estate taxes. My older sister would manage the LLC, with all 4 siblings being named equal owners of it. According to the lawyer, this would shield dad's money after the 5 year lookback period for Medicare to touch, as it is a complete transfer of assets out of his name.

Has anyone else used this LLC approach to protect their assets? If so, how has it worked for you?

Last edited by jfkIII; 07-21-2012 at 10:11 AM..
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Old 07-21-2012, 10:24 AM
 
Location: Florida
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What does your dad think of this?
Did he save up for old age so he would be able to take care of himself so he wouldn't have to ever be on the public dole?
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Old 07-21-2012, 10:29 AM
 
Location: SW MO
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Minor point here. The five-year look-back pertains to Medicaid, not Medicare.

Major point: Shielding an estate from estate taxes has some merit. Shielding asset from spend-down provisions to get on the public dole does not!
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Old 07-21-2012, 10:54 AM
 
Location: SoCal desert
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A family trust is also a complete transfer of assets.

I would do a Pro and Con list, comparing an LLC and a trust.

I'd also wait for Wilson513 or markg91359 or Robyn55 to chime in. I believe they're all in the legal profession ...?
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Old 07-21-2012, 11:09 AM
 
Location: Beautiful Upstate NY!
13,819 posts, read 25,165,592 times
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Quote:
Originally Posted by old_cold View Post
What does your dad think of this?
Did he save up for old age so he would be able to take care of himself so he wouldn't have to ever be on the public dole?
Nope...he wants to leave as much to his heirs as possible, with the government getting as little as possible. That's his wishes.
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Old 07-21-2012, 11:14 AM
 
Location: Beautiful Upstate NY!
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Quote:
Originally Posted by Curmudgeon View Post
Minor point here. The five-year look-back pertains to Medicaid, not Medicare.

Major point: Shielding an estate from estate taxes has some merit. Shielding asset from spend-down provisions to get on the public dole does not!
True on the minor point, I always get them confused.

Regarding the major point, he does not look at it as being on the public dole. He views Medicaid as his God-given right, as I do. He has paid into the system, as we all have, and in fact, we are all forced to use medicaid as our primary insurance, when the time comes.

Please, I don't really want this thread to turn into a discussion as to whether protecting assets from medicaid is the correct moral thing to do. Just looking for actual experiences where someone has used an LLC as an asset protection plan.
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Old 07-21-2012, 11:21 AM
 
Location: Beautiful Upstate NY!
13,819 posts, read 25,165,592 times
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Quote:
Originally Posted by Gandalara View Post
A family trust is also a complete transfer of assets.

I would do a Pro and Con list, comparing an LLC and a trust.

I'd also wait for Wilson513 or markg91359 or Robyn55 to chime in. I believe they're all in the legal profession ...?
Thanks. I did bring this up at the lawyer's. He said that dad would still have some control in a trust vehicle, Whereas, the LLC is clear cut...he would have abosolutley no say in it. That is critical for the 5 year lookback. We, as his 4 children, with my sister managing the LLC, have all informally agreed to treat this LLC as a holding box for him, simply for the asset-shielding purposes. We have agreed that it is still dad's money (theoretically, but no legal right to it), and no distributions, other than for his own needs, will be made from it. At the time of his passing, the LLC will be dissolved, which each of the 4 siblings getting exactly 25%.
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Old 07-21-2012, 11:25 AM
 
Location: Florida
19,773 posts, read 19,875,860 times
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Quote:
Originally Posted by jfkIII View Post
True on the minor point, I always get them confused.

Regarding the major point, he does not look at it as being on the public dole. He views Medicaid as his God-given right, as I do. He has paid into the system, as we all have, and in fact, we are all forced to use medicaid as our primary insurance, when the time comes.

Please, I don't really want this thread to turn into a discussion as to whether protecting assets from medicaid is the correct moral thing to do. Just looking for actual experiences where someone has used an LLC as an asset protection plan.

You're confusing Medicare with Medicaid.
He has paid into the Medicare system.
Medicaid is a needs based public program for poor people with no assets.
It is the prgram that pays nursing homes/long term care facilities....Medicare does not
Hiding your assets is not the same as not having any.
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Old 07-21-2012, 11:40 AM
 
Location: Beautiful Upstate NY!
13,819 posts, read 25,165,592 times
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Quote:
Originally Posted by old_cold View Post
You're confusing Medicare with Medicaid.
He has paid into the Medicare system.
Medicaid is a needs based public program for poor people with no assets.
It is the prgram that pays nursing homes/long term care facilities....Medicare does not
Hiding your assets is not the same as not having any.
AH..thanks for the clarification.

Yes, the LLC does physically, and legally, remove his assets from him. After surviving 5 years, the only assets he will have is the lesser that he accumulates between now and the 5 year period. After 5 years, Medicaid will not be able to attach to the LLC in any manner, as it no longer legally belongs to him, and has satisfied the 5 year lookback period.

Of course, informally, we as his surviving children still view the money as his own, until he passes.
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Old 07-21-2012, 11:45 AM
 
Location: SW MO
23,605 posts, read 31,463,318 times
Reputation: 29071
Quote:
Originally Posted by jfkIII View Post
True on the minor point, I always get them confused.

Regarding the major point, he does not look at it as being on the public dole. He views Medicaid as his God-given right, as I do. He has paid into the system, as we all have, and in fact, we are all forced to use medicaid as our primary insurance, when the time comes.

Please, I don't really want this thread to turn into a discussion as to whether protecting assets from medicaid is the correct moral thing to do. Just looking for actual experiences where someone has used an LLC as an asset protection plan.
You opened the door. We all pay into Medicare. Medicaid is a drain on the general funds of both the federal and state budgets. What you wrote smacks of entitlement on his part and obviously he passed that unpleasant and irresponsible attitude on to his children. As a taxpayer, I don't feel the least bit compelled to send in my taxes so you can get an inheritance.
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