The first example of a catastrophe where a Limited Liability Company can be helpful is a lawsuit. For example if I own a rental and am sued because of something that occurs on the rental property the potential creditors can come after not only my rental property but also my personal residence, my car, my fishing rod, pretty much anything I own. That is where an LLC comes into play; if my rental property is in an LLC it adds a layer of insulation between my personal assets and my business assets. If set up and managed correctly the LLC will limit creditors reach to only those assets inside an LLC. For those with two rental homes the same principal applies.

Another example of a catastrophic event is the death or incapacity of the business owner. Death or incapacity of an owner can kill operations and run a business into the ground. Structuring an LLC with the correct formation documents as well as a succession plan can ensure that others will be prepared to step in and keep things running. Most small businesses do not make it past the first generation in significant part because of lack of planning for a future beyond the current owner. When a business owner plans for serious, life-altering events there is a greater chance that wealth will not be needlessly wasted.

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The appointed guardian must follow certain guidelines such as regular reports to the court. A guardianship is a last resort because it involves removing a person’s individual liberties and assigning them to the care of someone else. I definitely do not want to discount the value of the process for some, but in most cases proper planning can circumvent the need for a guardianship.

The plan is a simple combination of documents; 1. the Durable Power of Attorney, 2. the Advance Healthcare Directive and 3.(in some cases) a Revocable Trust. The durable power of attorney appoints an agent to be able to make financial transactions on behalf of the person granting the authority. The term “durable” means that the Power of Attorney does not become invalid if the granting person loses capacity. The Advance Healthcare Directive appoints an agent to make Healthcare decisions for a person who no longer has capacity. Finally, the Revocable Trust is an organizational tool that can help ensure a person’s assets are accounted for and managed correctly during incapacity.

By implementing these documents a person skips the need for a court process by designating agents to help during incapacity. This means that the incapacitated individual never loses their rights or liberties because they are simply authorizing agents to act on their behalf rather than surrendering control of their rights to a guardian. Finally, a word of caution, Powers of Attorney are very important documents and should be used as part of a carefully-made plan, not haphazardly.

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First off, what is Medicaid? Medicaid is a State-managed program to provide for the medical needs of the impoverished. Medicaid is often confused with Medicare, which is a Federal program to ensure medical coverage for seniors and the disabled. Medicare is mandated for everyone over the age of 65, however; it does not cover long term nursing care.

To be eligible for Medicaid an individual cannot have more than $2,000 net assets to his or her name. This asset limit does not apply to a home, one vehicle, household furnishings or many funeral plans. This is not a complete list of exemptions but it gives a good idea. Furthermore, Medicaid imposes a penalty on any amount given away by the applicant within five years prior to the application for assistance. In my practice I have encountered some very unfortunate instances of misinformed families and individuals who did not understand that mom or dad could not simply give away all of their assets and still qualify for state assistance.

Finally, many of my clients ask about estate recovery. Following the death of a Medicaid patient, the State has the right to recover the costs it has spent on care from the deceased person’s estate. The main target of recovery is typically the house, however; the State will not currently recover against a home if the surviving spouse is still living in the home at the time of the Medicaid patient’s death. Common sense takeaway: If you or a loved one is considering using Medicaid for long term care, be sure to understand all of the requirements as soon as possible.

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