Elder Law and Asset Protection
As the average life span continues to increase, so does the need for practitioners who understand elder law. This unique area of law focuses on meeting the goals and objectives of older clients and their families, who may be dealing with a health crisis or degenerative condition, by using a variety of legal tools and techniques.
Elder Law
Because state laws, federal laws and regulations are increasingly complex, legal matters affecting the older client and the disabled are confusing and constantly changing. Fortunately, our well-trained, sensitive attorneys and staff are ready to help you and your loved ones.
Pre-Planning vs. Crisis Planning
In elder law planning for long-term care, pre-planning generally refers to techniques implemented well before care is needed, when the client is still healthy enough to make thoughtful, long-range decisions. This may include estate planning tools such as revocable or irrevocable trusts, carefully structured gifting, beneficiary designations, and powers of attorney, all designed to protect assets, preserve flexibility, and coordinate with eventual Medicaid eligibility or private-pay care needs. By contrast, crisis planning is used when long-term care is imminent or already underway, so the available options are narrower and must be implemented quickly to respond to an immediate health decline or nursing home admission.
The difference between the two approaches is often timing and leverage. Pre-planning can allow for more proactive asset protection, including transfers to trusts or other structures that may be effective over time, while crisis planning often relies on last-minute strategies such as permissible spending down, gifting/loan techniques, annuities, and other Medicaid-compliant repositioning of assets to help qualify for benefits while preserving as much family wealth as possible. In practice, both approaches aim to balance care access and asset preservation, but pre-planning usually offers more options, more control, and less risk than waiting until a care crisis forces faster, more limited decisions.
How long before I need Medicaid benefits do I need to set up an Asset Protection Trust (APT)?
In an ideal scenario, you should transfer your assets into an APT more than five years before applying for Medicaid benefits. This is because Medicaid has a five-year “lookback period,” during which it reviews any asset transfers you’ve made. If assets were moved into the trust within that five-year window, they could still be counted toward your Medicaid eligibility. Early planning is essential — the sooner you establish the trust, the better protected your assets will be.
If I transfer my assets into an APT, do I lose all control over them?
Not entirely. While the trust is irrevocable — meaning you cannot change its core terms or reclaim the assets — you do retain certain rights. You can continue to receive income generated by the trust assets, change the remainder beneficiaries (those who ultimately inherit), and remove and replace the trustee. You will also remain responsible for paying income taxes on any earnings the trust generates, since it qualifies as a “grantor trust” for tax purposes.
Why is an APT potentially better than simply transferring assets directly to my children?
Outright transfers to children carry several risks that an APT avoids. Your child’s creditors could make claims against transferred assets, a divorce could expose them to equitable distribution proceedings, and poor financial habits could result in the assets being lost entirely. Additionally, from a tax standpoint, direct transfers carry over your original cost basis — meaning your children could owe significant capital gains taxes when they sell. Assets held in an APT, by contrast, receive a step-up in cost basis to fair market value upon your death, often eliminating that tax burden entirely.
Plan ahead to protect what matters
Schedule a consultation with our Pennsylvania estate planning and elder law attorneys today.
