People spend their lives working hard to save money and accumulate wealth – whether in saving accounts, investments or material assets. For many, the goal is to have something to leave their children and grandchildren when they pass on. However, even if you have been able to accumulate a significant amount of wealth, it may not actually get to go to your heirs.

Life expectancies have increased dramatically in the last few decades, and while people are living longer and fuller lives, it’s also common for people to need significant medical care or spend their final years in assisted living or nursing homes, which are extremely expensive. These costs can take a significant portion – if not all – of even a large estate.

Asset preservation techniques

The good news is you can take steps to protect your hard-earned assets no matter what the future holds. There are many estate planning tools available to shield assets against depletion by medical and nursing home costs, or against spendthrift family members.

Common asset preservation tools include:

  • Gift deeds: If you own second homes or other real estate, you risk losing these properties should you need Medicaid. Deeding these properties away, at least five years before needing Medicaid, will ensure you pass them on to the next generation.
  • Trusts: Transferring properties, businesses and accounts into trusts is another way to protect your assets. There are a wide variety of trusts to choose from – such as life insurance trusts, qualified personal residence trusts (QPRTs), qualified domestic trusts (QDOTs) – depending on your goals and your financial situation.
  • Family limited partnerships: Family limited partnerships and limited liability companies are another common asset preservation tool. These are particularly important for those who own businesses, or business interests, or interests in other investments.

The key is to act early

In addition to asset preservation, many of these tools also offer tax benefits. However, the key when attempting to protect assets is to act early. The sooner you draw up and implement a plan to protect your assets, the better. If you have questions about which of these options may be best for your particular set of circumstances, talking with an attorney can provide more insight.