Strategies for Asset Protection: Safeguarding Your Wealth Against Unexpected Risks
Posted on March 9, 2025 by shieldsandboris
Aging brings financial risks. One of the most important things you can do is to develop a proactive, comprehensive strategy to protect and preserve your wealth. Building wealth takes years of hard work. Unfortunately, without the right protections in place, it can be diminished (or lost) far more quickly. At The Elder Law Offices of Shields & Boris, we help people and families anticipate risks and plan for the future. Here, our Pennsylvania asset protection attorney highlights the strategies to protect your wealth against unexpected risks.
Background: Aging Brings Financial Risks
As people age, financial security can become uncertain. Rising healthcare costs, long-term care expenses, and potential legal challenges all pose risks to an individual’s hard-earned assets. Without proper planning, a lifetime of savings could be depleted. The Pennsylvania Department of Human Services notes that the average cost of a private room in a nursing home in the Commonwealth is over $12,000 per month. These almost jaw-dropping high costs can quickly drain an estate. Estate planning and asset protection strategies can help to shield assets from the risk of aging.
An Overview of Strategies for Asset Protection
Establish an Irrevocable Trust: Trusts are among the most effective asset protection tools. Irrevocable trusts can be especially useful. Once assets are transferred into a proper irrevocable trust, they are no longer legally owned by the specific person. Why does that matter? It means that they are shielded from creditor claims, lawsuits, and even long-term care costs. Notably, it can be particularly useful for Medicaid planning. Assets held in an irrevocable trust may not be counted when determining eligibility for benefits. However, because the trust cannot be altered or revoked after it is established, careful planning is essential. The creator of an irrevocable trust will lose direct control over it. Irrevocable trusts are complicated. An experienced Pennsylvania asset protection lawyer can help you evaluate the strategy and ensure that any trust you set up is structured in the best way to protect your property.
Note: Medicaid has a five-year look-back rule. To be protected from Medicaid, assets must be placed in a proper irrevocable trust at least five years before the need for long-term care arises.
Use the Right Asset Protection Trust: Not all trusts offer the same level of protection. Asset protection trusts are specifically designed to safeguard wealth from lawsuits, creditors, and even divorce settlements. Depending on your needs, you may benefit from a domestic asset protection trust (DAPT) or an offshore trust, both of which provide legal barriers against potential financial threats. These trusts allow you to retain some control over your assets while keeping them out of reach from creditors or other claimants. There are some highly-specific, technical trusts that can be used for asset protection in certain circumstances. A top-tier Pennsylvania trust planning lawyer can help you find the best option.
Maximize Retirement Account Protections: To best protect your assets, you will want to be sure that you are getting the absolute most out of your retirement account options. Retirement accounts like 401(k)s and IRAs offer built-in asset protection under federal law and Pennsylvania law. In many cases, these accounts are shielded from creditors, making them a powerful tool for preserving wealth. However, protections vary depending on the type of account and whether withdrawals have already been made. To maximize the protection of your assets, you should ensure that you are contributing the maximum allowable amount to their retirement accounts while carefully considering rollover strategies. Beyond that, you should structure beneficiary designations in the most sensible manner.
Implement an Early Gifting Strategy: Gifting assets before they become vulnerable to potential creditors or long-term care costs is a proactive strategy for protecting wealth. The federal gift tax exemption allows individuals to give away a certain amount each year ($18,000 per recipient in 2024) without triggering a tax penalty. By gifting assets early—whether to family members, trusts, or charitable organizations—you can legally remove them from your estate and reduce the risk of future financial loss.Note: Medicaid’s five-year look back rule applies to early gifting as well. Gifts must be made at least five years before long-term care needs to be fully protected from long-term care costs.
Explore All Available Insurance Coverage Options: Finally, it is crucial that you consider all of your insurance options. Insurance is one of the most underappreciated asset protection tools. Insurance can provide essential financial security. Long-term care insurance helps cover nursing home or assisted living expenses. It can reduce the need to deplete personal savings. For example, umbrella liability insurance offers extra protection against lawsuits, particularly for individuals with significant assets. Beyond that, life insurance can provide tax-free wealth transfers to heirs while also serving as an income replacement strategy for dependents. It is important to regularly review insurance policies to ensure they provide adequate coverage for current risks and future needs.
The Elder Law Offices of Shields & Boris is a Leader in Asset Protection
Asset protection is complicated. It is crucial that you develop a proactive strategy for safeguarding your wealth against unexpected risks. With over 65 years of combined legal experience, the legal team at The Elder Law Offices of Shields & Boris specializes in asset protection. We help people and families protect themselves from the high costs of aging. Our attorneys have experience with estate planning, elder law, Medicaid planning, living trusts, estate administration, special needs planning, and more. With several conveniently located offices in the region, we help people and families with asset protection strategies throughout Western Pennsylvania.
Contact Our Pennsylvania Asset Protection Attorney for a Confidential Consultation
At The Elder Law Offices of Shields & Boris, our Pennsylvania estate planning attorney has extensive experience handling asset protection issues. If you have any questions about asset protection strategies, we are here as a resource. Give us a call at (724) 302-3806 or contact us online for your confidential consultation. Our estate planning and elder law team provides asset protection services to people and families in Pittsburgh and throughout Western Pennsylvania.
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