Ethical Loopholes To Protect Assets When A Spouse Dies.?
Posted by IT CommentatorAug 28
Are there any sources for strategies on protecting assets when a terminally ill spouse dies? Especially, if the spouse dies with a large unpaid medical bill? My mother owns a house, two cars, and a small retirement fund and we wish to protect her from the fallout of her husband’s death by maybe changing titles, transfering ownerships, etc, to utilize loopholes. Any insights muchly appreciated.
Estate planning is one thing; asset protection is another.
In many cases, a family limited partnership trust is beneficial. You need to have a lawyer to set things up, but knowing what you want done before you see the lawyer is essential; otherwise, you spend $600/hour to confuse the lawyer, and he ends up doing the wrong thing for you, which makes the $600/hour seem like a pittance.
Jay Mitton has written some books on the subject. He’s not the only one, not by any means, and it’s important to look at the copyrights on the books; a 2006 copyright book by the same author will probably be a lot better than a 1994 book, simply because of the way things have developed.
In any case, once you get to Mitton’s page at Amazon, you should be able to find other authors as well. A $20 book is a lot better than a $2.000 lawyer bill, which is a lot better than a $200,000 loss.
Those can all work, but some are “grey area” .. borderline illegal.
If you and your mother do not wish her to take out an equity loan on the house, you can always write a contract whereby you (all the kids) pay her fair market value for the house and cars, and you lease them to her long term for a token payment amounting to the property taxes on the house, and a maybe few hundred a year for the cars.
As for the retirement fund…I don’t know if they can touch that, since I am unfamiliar with the laws in your jurisdiction.
THEY CAN’T TOUCH THE HOUSE OR THE CAR OR THE ACCT SHE DOESN’T HAVE TO CHANGE TITLES ALL SHE DOES IS MAKE SMALL PAYMENT OR TAKE OUT A SMALL LOAN SHE IS ALLOWED I HOUSE I CAR AND MONEY IN THE BANK GO TO THE LEGAL LIBRARY YOU CAN FIND OUT EVERYTHING YOU WANT OT KNOW DON’T WORRY GOOD LUCK
The medical bill will still have to be paid, and it will be the responsibility of the surviving spouse or children to pay it, no matter whose name the property is under.
A living trust is a helpful tool – your father could transfer all his assets to the trust, and have the trustee be responsible for paying his debts from the trust. That protects against inheritance tax.
I’d strongly suggest meeting with a lawyer who specializes in trusts and wills.
It’s called estate planning. Talk to a probate atty about the best way. USually house will transfer as joint tenants without being effected by estate. Cars can easily be transfered among spouses. The professional would be the one to check with about the retirement fund
This is going to be very tough due to the fact that the spouse is terminally ill.
If anyone looks into this they will find out that you transferred titles, funds, ownership whatever for the sole reason of trying to avoid paying this debt. Which is illegal.
I went through this with my Mother, but she was smart enough to make everything she had joint with me several years ago so it was simple for me.
I would contact a good family lawyer and see if they can help you.
Provided that they don’t have an prenup, the best answer I see is to separate their assets (and thereby protecting the spouse with assets from the one with liabilities) is: Divorce
If the spouse with liabilities is eligible, bankruptcy may also be an option – but unfortunately, time is not on her side.
Maximizing a 401(k) will protect those assets, but not those that are not in the 401(k), and since you can only do so thru payroll deduction, that’s not gonna protect a lot of assets.
1st of all…the retirment fund is excempt, they could not seize that if they wanted to.
2nd of all…transfering titels and such would prevent the collectors from seizeing properties but not from harrassing your mother until her dying day for their money. As his spouce she is a guarantor of the bill and is required to pay it. It would be a good idea to set up a payment plan so her assets when she dies do not get eaten up by this debt.
3rd of all…while she may transfer the assets to you, you will wind up with a gift tax at the end of the year and depending on the value of the gifts you may wind up with a sizeable tax burnen and you should weigh that against what the medical bills are so you can make sure it is worth it to do this.