Full question:
Hi, my name is Brian Heinz. I have 2 questions.1) I have 2 Nevada Family Limited Partnerships. Bith hold Real Estate Assets. My wife and I are presently both General and Limited Partners of both Partnership. 95% LP and 5% GP interests. I want stronger asset protection than what my FLPs provide. Soooo, I want to gift both our LP interest to a irrevolkable Trust. By doing this, even though the Partnership assets and our interest as partner in thoes assets will be gone. I can still control the trust as general Partner? AS long as I do NOT take unreasonable and excess partnership management fees for services. Meaning that the income from thoes partnership assets is now the trust income assets, except for my charges for managing the Partnership? 2) Also, I understand that by doing this stratigy, after 2 1/2 years, we could qualify for long Term care, without having to sell all our assets? I only need to know the basic answer. Meaning that I realize that what I propose for my asset protection stratigy if not done correctly and with no Legal action on the horizo, it could work against me.Brian Heinz
- Category: Trusts
- Date:
- State: California
Answer:
It is possible to transfer a partnership interest into a trust while remaining a trustee. However, as a fiduciary, you must adhere to two main duties: the duty of loyalty and the duty of care. The duty of loyalty requires you to act solely in the interest of the trust, avoiding any personal profit or conflicts of interest. The duty of care mandates that you perform your responsibilities competently and thoroughly, following industry standards.
If you transfer your LP interests to an irrevocable trust, the income generated from the partnership assets will belong to the trust, except for any reasonable management fees you charge. However, be cautious of potential claims of breach of fiduciary duty, which can arise if you fail to uphold these duties.
Regarding long-term care eligibility, there is a 60-month look-back period for asset transfers to determine eligibility for government assistance. This means that any assets transferred for less than fair market value may affect your eligibility. The Deficit Reduction Act of 2005 established this five-year look-back period, which applies to transfers made on or after February 8, 2006. For every $4,300 disposed of, you may be disqualified for one month of medical assistance coverage.
Some transfers, like those to a spouse or certain family members, may not affect Medicaid eligibility. It's crucial to ensure that your asset protection strategy is executed correctly to avoid any unintended consequences.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.