We’ve previously talked about asset protection, but before we jump into some real-life examples, let’s review:
Asset protection is simply protecting the things you own. This could be your house, your savings accounts, your IRAs, farmland, etc. Life is unpredictable, so there are quite a few risks that we all need to think about protecting ourselves from. Some possibilities include medical bills, scams, accidents, Acts of God, poor financial decisions, nursing home costs, and risky relationships.
Let’s look at three specific types of asset protection you may need to consider…
Three Real-Life Examples of Important Planning for Asset Protection
1. Medical Bills
While you are healthy and younger, you will hopefully be covered by health insurance that offsets doctor visits and hospital stays. But as you age and need more care those things may not be covered by health insurance or Medicare. This is particularly true when it comes to at-home care or a nursing home. Without planning, those costs could quickly eat up all your life savings. By planning ahead, you can protect more of your savings and more easily qualify for benefits to help pay for care. Many people don’t think they’ll need this, but statistics show us that 70% of people over the age of 70 will need some kind of care like this, and we also know that 70% of nursing home residents rely on Medicaid to pay the outrageous bills.
2. Scams or Mismanagement
As you age, you are at greater risk of someone taking advantage of you. Sadly, elder fraud is an increasing issue right now as technology makes it easier and easier to prey on seniors. This often comes in the form of:
- fake emails from banks,
- fake calls from the IRS,
- Medicare scams, and
- taking advantage of seniors through a Power of Attorney
Diminished cognitive functioning and declining memory make it easier to make big financial mistakes. You need to plan ahead so someone you trust can step in when the time comes and protect you if you are unable to do so yourself. Read our series on elder fraud here.
3. Kids Who Can’t Handle Money
So, what about after you’re gone? If your kids are not prepared to handle their inheritance, they could quickly blow it. (Read our post, “Are Your Kids Ready for Their Inheritance?” to take a quick quiz.) There is planning you can do ahead of time to protect them and make sure their inheritance is there and will last for many years.