[This article was originally printed in the Barrister, a publication of the Camden County Bar Association in November, 2014.]

Many business and professional people, including lawyers, have worked a long time and accumulated significant assets. There is an old saying: “It not what you earn, it is what you keep.” We live in a litigious society. Business and professional people have significant exposure to claims from creditors, because of the activities in which they engage and because they have assets and, therefore, make good targets. This is the first of a three-part article exploring strategies to protect hard-earned assets from claims of creditors. There are steps that can be taken to protect assets from these claims, if they are taken in a timely manner. An individual cannot wait until a claim is filed, or even until an incident has occurred that may lead to a claim, before taking action. Steps must be taken in advance. The Fraudulent Transfer Act is discussed below. This article will discuss the strategies for asset protection from simple to complex. Useful strategies include obtaining the proper insurance, proper titling of assets, retirement plans, structuring business assets, Domestic Asset Protection Trusts (DAPTs), and Off-Shore Trusts. Finally, an analysis will be made as to whether an individual is a good candidate for asset protection planning.

STRATEGIES      

There are a number of strategies available to protect assets. Some are quite simple, and others are complex.

INSURANCE

The basic first step for asset protection is insurance. Basic insurance includes automobile, homeowner’s insurance, and life insurance. The purpose of auto insurance and homeowner’s insurance is obvious. Life insurance is critical to help protect assets in the hands of surviving family members. Life insurance proceeds are generally free from the claims of creditors. Every professional should have adequate malpractice insurance. The amount of the insurance will depend on the professional’s exposure to risk. If commercial real estate is owned, fire and casualty insurance, together with liability insurance, is important. For business owners or individuals serving on boards of directors of for-profit entities, and non-profits, it is essential to obtain officer’s and director’s liability insurance. Personal umbrella insurance is extremely inexpensive. A personal umbrella insurance policy supplements the liability limits on standard policies. The insurance company issuing the umbrella policy will have certain minimums for the underlying policies and will cover liability in excess of those limits. Business interruption insurance is available to provide operating monies while a business is not operating due to certain casualties.

TITLING OF ASSETS

Proper titling of assets can be a useful strategy in asset protection planning. Litigation-prone professionals or business persons may choose to title the bulk of their family assets in the name of their spouse. This may offer some creditor protection, but it could hinder estate planning. If a primary residence is owned as tenants-by-the entireties, a judgment creditor cannot enforce a lien against the debtor so long as both spouses are residing in the home. Assets can be titled in the names of children. The problem is if the children are subject to claims of their own creditors, the transferred assets are at risk.

RETIREMENT PLANS

ERISA plans include employer-sponsored 401ks and defined benefit and defined contribution plans. These include both pension plans and profit-sharing plans. ERISA plans provide protection against all types of creditors. It should be understood that while creditors cannot assert a claim against funds while they are in the retirement account, they can make a claim on any distributions. In New Jersey,[1] IRA accounts are protected against the claims of creditors. The funds are protected while they are in the account, and distributions from the account are also protected. Under the Federal Bankruptcy Act, federal bankruptcy provides complete protection if the IRA is a rollover from a qualified ERISA plan. Under federal bankruptcy law the protection is limited to $1,000,000 if the IRA is not a rollover from an ERISA plan. An inherited IRA is not protected under federal bankruptcy law.[2]

ASSETS USED IN PROFESSION OR BUSINESS

There are a number of business entities that provide protection of business assets from claims of creditors. These include corporations, LLCs and LLPs. In utilizing these entities, it is often useful to establish separate entities for separate purposes. A corporation, properly operated, should protect business assets from claims of business creditors. For all intents and purposes, an LLC offers essentially the same creditor protection as a corporation with the same trap for the unwary (i.e., personal guarantees). Limited Liability Partnerships offer significant protection for limited partners. However, the general partner is exposed to claims of creditors. A general partner has unlimited liability for acts of the partnership. A solution to this problem is to form a corporation to serve as general partner. A good strategy is often to use separate business entities to own separate business assets. For example, a corporation might be formed to operate a business while a separate LLC might own business equipment and another LLC might own business real estate. Equipment and real estate could be leased to the corporation operating the business. The claim against one entity may not jeopardize assets owned by separate entities. It is critical in operating separate entities that funds not be mixed between or among those entities. Funds generated by the operating company must remain in the operating company. Funds generated by the leasing companies must remain separate in the leasing companies. If the operating company runs low on money, it should not borrow from the leasing companies.

Next month’s column will discuss Domestic Asset Protection Trusts and Off-Shore Trusts.

[1] N.J.S.A. 25:2-1.

[2] Clark v. Rameker, 573 U.S. ____ (2014).

We have created this post as a resource for caregivers that highlights 20 useful websites in a number of different categories that offers a collection of information on caregiving, resources for caregivers, tools, motivation and diversions to both educate and encourage the family caregiver. We hope these tools will simplify the job and improve efficiency by utilizing services and benefits that the care recipient or caregiver qualifies for.

 (Related: Can Parents Live With Their Adult Children?)

ASSISTANCE PROGRAMS, BENEFITS, INSURANCE

SOCIAL SECURITY  –  apply for benefits for retirees, survivors, some disabilities, low-income families, some children & parents; get or replace your Social Security card; retirement estimator; services for the homeless; forms & publications, & more

 MEDICARE  –  health insurance for people 65 or older, under 65 with certain disabilities, and any age End-Stage Renal Disease; eligibility; apply online; find doctors & facilities; find & compare health & prescription drug plans; Medigap; dialysis facilities; terms & definitions; Medicare explained in plain English!  It also has “Ask Medicare,” a section with answers to important medical questions, as well as caregiving support & resources.

 VA CAREGIVER SUPPORT  –  caregiver support, services, home equipment & modifications, tips & national support line for those caring for a veteran; veteran benefits & services, vocational rehab & employment, healthcare info, suicide prevention, burials & memorials, and more.

 ELDERCARE LOCATOR  –  services for older adults and their families; search for them by zip code or by category – Alzheimer’s, caregiver, elder abuse prevention, in-home services, legal assistance, transportation, volunteerism, and more.

 AREA AGENCIES ON AGING  &  NATIONAL ASSOCIATION OF AREA AGENCIES ON AGING (n4a)  –  services for older adults including health & wellness, caregiver support, area resources, care coordination for recovery from a hospital stay, benefits counseling on Social Security, Medicare, Medicaid, Supplement Insurance, volunteer opportunities and more.

(Related: Late-Stage Alzheimer’s and Caregiver Expectations)

 SNAP FOR SENIORS  –  lets you search for services, housing & providers by zip code or state.

 NEEDYMEDS.ORG –  an online information resource of programs to assist persons who cannot afford their medications or health care.  It lists pharmaceutical companies’ assistance plans, PAP’s (Patient Assistance Programs), which can help the patient receive medications for free or at a discounted price upon meeting their eligibility requirements.  This can be a great help when health insurance or Medicare does not fully cover all of the patient’s meds.  It also lists low-cost or sliding scale clinics.

 PATIENT ADVOCATE FOUNDATION  –  provides assistance to patients with chronic, debilitating or life-threatening diseases on issues of job retention, medical debt crisis or insurance access.  Assistance takes the form of mediation and arbitration services.  PAF does not offer financial assistance.  If you need help with co-pays, call their Co-Pay Relief Program at 1-866-512-3861.  A case manager can also take the patient’s details and look for companies that offer help getting the meds that he or she needs.

 COPAYS.ORG  –  part of the PATIENT ADVOCATE FOUNDATION, they provide co-pay assistance to insured (including Medicare Part D) medically and financially qualified patients diagnosed with several diseases or conditions.  You can reach the CPR team (Co-Pay Relief Program) at 1-866-512-3861 for them to guide you through the enrollment process or enroll securely online.

 INTERNET DRUG COUPONS  –  hundreds of Manufacturer coupons for prescription and non-prescription drugs, brand name and generics.

(Related: 2014 Pension Rates)

 HEALTHCARE REFORM  –  Affordable Care Act explained; changes, timeline, how they affect individuals, business; tools to compare hospitals, home health, nursing homes & dialysis facilities; learn about prevention, staying healthy & raising healthier kids; coverage & pricing options; and more.

 eHEALTHINSURANCE  –  health insurance carriers & plans to view & compare; online & telephone assistance from a broker; no fees; advocacy should you need to deal with the insurance company regarding claims, billing or anything else; individual & family plans; long- or short-term policies; medical, dental, travel, life and Medicare plans, and more.

 BENEFITS.GOV  –  government assistance through benefit programs for things like job training, nutritional assistance, health care & education, for instance.  You must answer questions, then your answers are compared with over 1000 programs to check for eligibility.

 BENEFITS CHECKUP  –  over 2000 public & private benefits programs for seniors with limited incomes & resources, including prescription drugs, nutrition, energy assistance, legal & tax relief, in-home services, transportation, Social Security, volunteer services and more.

 MANAGING CAREGIVING TASKS, TIPS, INFO

FDA DRUG DATABASE  –  drug info including recommended dosages, interaction, drug safety, generic drugs, approved prescription drugs, drug recall, fraudulent products, as well as medical devices, vaccines & much more.

 CAREGIVER.COM  –  for, about & by caregivers; information & support about caregiving issues; tips from caregivers; nutrition, recipes, tips on getting care recipient to eat; links; dates of conferences around the US; submit your stories & ask other caregivers for wisdom / suggestions; and more.

 CARING.COM  –  information on health issues such as MS, epilepsy, sleep problems; “Steps & Stages” provides expert guidance and community support for Alzheimer’s caregivers; forums for caregivers; blogs; financial matters such as estate planning, guardianship, paying for care, power of attorney; in-home care & senior living topics; well-organized sections; caregiver wellness, and more.

 NATIONAL ALLIANCE FOR CAREGIVING  –  message board for questions & answers; caregiver signs of stress & what to do about them; policy & law; the healthcare maze; practical advice on managing caregiving; respite, support, literature, websites; and more.

 LOTSA HELPING HANDS  –  organize helpers & volunteers through a private web-based service; coordinate daily tasks with family, friends, neighbors such as transportation to medical appointments, coverage; share medical information securely with designated family members; sections for well-wishing, blog, journal, photos; caregiver can post requests for help for helpers to fill – no overlaps; more.

 CARINGBRIDGE SUPPORTPLANNER  –  an online calendar for family and friends to organize helpful tasks and coordinate care.  These can include meal planning, transportation, child minding, pet sitting, household chores or giving the caregiver a break.

 GIVE FORWARD  –  create a page to support a friend or family member by raising funds for medical expenses online.  Promote your page through email or Facebook.  Friends and family can donate securely online until the end date of your fundraiser.  The beneficiary will receive a check for the amount raised – minus the website’s 7% fee.

 PERSONAL HEALTH RECORDS  –  lets you create & maintain your health information or that of a loved one, which can be shared with doctors, caregivers, family, or others involved in providing medical care.

 AAHCP  –  American Academy of Home Care Physicians: a directory of doctors in the USA who make house calls.  ”Specialties include internal medicine, family practice, pediatrics, geriatrics, psychiatry, emergency medicine, and more.”

CAREGIVER & PATIENT COMMUNITIES, WELLNESS, COPING

TREATMENT DIARIES  –  keep an online diary of your caregiving experience as a way to cope; share your diary or keep it private; read other diaries from people going through similar circumstances to yours to find support, tips, ways to cope.

 THE COFFEE KLATCH  –  online talk radio providing interviews with the most respected world renowned experts in many fields dealing with children with special needs; created for parents of children with special needs to find accurate information and resources so that they can make better and more informed decisions about the care of their children.

 BENSFRIENDS  –  network of patient communities that support and provide information on rare diseases.  Its “mission is to ensure that everyone in the world with a rare disease has a safe place to go and connect with others like them.”

 CARINGBRIDGE  –  create a secure personal website to connect with family and friends while experiencing a health event.  Stay in touch with other loved ones by posting updates on the patient and reading their messages of hope and encouragement.

 CAREGIVER ACTION NETWORK FORUM  –  ”a place for family caregivers to post questions and to seek advice” on any topic related to caregiving.  CAN has lots of additional information as well as a forum for caregivers, so explore the website.

THE CAREGIVER SPACE  –  a free social network that provides all family caregivers with resources, support and a chance to connect with each other in order to reduce stress, isolation and exhaustion so that they may better cope with the demands of their caregiving journey.

CAREGIVING  –  offers a wealth of information & support for family caregivers through instructional webinars (on coping, stress reduction, and many other pertinent topics), coaching, books, personal blogs, forum and insightful posts that help and guide family caregivers.

EXPERIENCE LIFE!  –  nutrition, wellness, life wisdom, activities to stay healthy; practical articles with realistic goals & plans to achieve them; very pertinent topics such as sugar in foods, anxiety, depression fighters, how foods can affect your mind & metabolism; fitness; tlps to think more positively; overcoming resistance to change & barriers to self-care; and more.

 DIVERSIONS, EXPLORE, LEARN

MUSEUMS IN THE USA  –  links to museums all across the US, great for a mental getaway!  This is great for taking a break from it all for a little while – for free & no packing!

VIRTUAL LIBRARY MUSEUMS PAGES  –  links to museums all over the world; another website for your mind – & spirit – to wander & to recharge.

MUSEUMSTUFF.COM  –  museums in USA and the world; fabulous website with loads of museums to visit – if only virtually.  Sometimes, all we need is to see something beautiful & inspiring to remember that there is another side to life, that good things abound despite the challenges we face.  Art can be a mental cleansing breath!

PANDORA  –  radio station that plays music you like online, on the go, at home.

YOU TUBE  –  videos about music, shows, travel, how-to, news, pets…laugh & amuse yourself, escape to the theater or to the islands!  Learn how to apply make-up or how to mix a great cocktail!  Learn to knit!  Sing along to your favorite musical or let yourself be serenaded by your favorite crooner!

TIME OUT WORLDWIDE    TIME OUT TRAVEL  –  plan where you’d like to go!  We can dream, can’t we?  Holidays, city guides, what to do & see!

– See more at: http://www.caregivingcafe.com/top-20-websites-for-caregivers/#sthash.X7zDvAIt.dpuf

Read more: http://www.caregivingcafe.com/top-20-websites-for-caregivers/

Christopher J. Berry is a Michigan elder law attorney Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.theeldercarefirm.com/ or call 248.481.4000