Real estate investors own more assets than most people, which makes them easy targets for lawsuits.
Unless you protect your assets, that is.
Deni chats with attorney Sayge Grubbs, Esq. about asset protection as you get older and accumulate more wealth, so you don’t fall prey to lawsuits!
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Deni Supplee: Hi, everyone, and welcome to Spark Rental’s Facebook Live and podcast. And as you see, Brian’s not here. We have a guest, and this is Sayge Grubbs and he has joined us before. So, you might remember him. Sayge is a licensed attorney in Alabama, and he has over a decade and a lot of asset protection experience. He’s in a credit business intermediately and a certified advanced business exit planner. I know I have learned a ton from him through the years, and he’s got a wealth of knowledge. So today we’re going to be primarily talking about covering your assets and especially for seniors or where we’re all going to get there eventually. I’m getting really close. I just had a birthday, so we’re going to I’m going to hand this over to Sayge and he’s going to let us know a little bit about how to cover our assets.
Sayge Grubbs: Well, thank you, Deni. And Brian, we miss you. But, yeah, I started CYAstrategies.com mainly because it was the perfect mixture of a perfect storm between helping real estate investors, which I have a lot of clients that are doing short term rentals or long-term rentals and flips. And then I also knew as part of my law firm Medicaid planning for seniors. Right. At least I call it Medicaid planning because a lot of business owners and a lot of people, until covid they didn’t see the value in going ahead and getting their assets protected. Right. And doing it ahead of time. But you always had that small crowd that is growing now due to baby boomers. But you always have a small crowd that was either in an assisted living or were headed to a nursing home or having illnesses that that was putting them in and out of hospital. Or maybe they had people coming in to take care of them. You know, and the big thing is you have a lot of caregivers, a lot of people with full time jobs, men, women over the age of 40 who are actually taking care of the seniors. And with that being said, it was like, OK, what is their biggest asset? Right. And most people you may have a fallback are those types of things, but real estate is usually someone’s largest asset. So, whether it’s rental properties or whether it’s just your home, a lot of times the real estate is what they’re trying to protect and that’s what they wanted to pass on. So that’s how I kind of got started and doing the CYA strategies and we do it, I call it CYAstrategies.com because we have business owners, we have real estate investors, and we help seniors that are looking to go into a long-term care facility and CYA stands for cover your assets or control your assets either way.
Deni Supplee: Let me ask you a question with, there’s insurance against nursing like if you have to go in a nursing home and things like that, is this a better strategy or does it go along with something like that?
Sayge Grubbs: Well, that’s a great question. So, if you have long-term care insurance. That’s great, but the problem is most people, by the time they want to get it or need it, they don’t qualify. The other issue is that long-term care insurance is very expensive and we’re living much longer. So, the insurance companies themselves kind of stop doing long-term care. So, you have to find and work with a I would say, work with some sort of fiduciary financial adviser, not just the typical insurance person. And at that point, you can actually find if you have cash available, you can actually find some ways to still have like a life insurance long term care plan. But, yeah, that’s the main thing, is when people need it, they don’t qualify for it. So, if you have it, we look at it and we help you with it. But the main thing that we do is we put those real estate investors with the people that are needing to sell that house and receive some sort of inheritance for their family.
Deni Supplee: Nice. Nice. So how does your strategies help protect?
Sayge Grubbs: Well, CYA for seniors, again, is part of CYA strategies, if you are a real estate investor, what are we always told you’re looking for what a motivated seller, right? Exactly. All right. So, if you’re dealing with a family who has a loved one that they know is not going to be returning home or, you know, they are having some condition or some issues where they may be at home, but they can’t really take care of them like they want to at home. Right. So, at that point, this person is very motivated because what they’re going to learn is in order to qualify and get Medicaid, which pays for the majority of people in nursing homes across America in order to qualify for that, a lot of times with Medicaid will tell you is that we’re going to put a lean on your house, OK? And nine out of 10 people. They cringe when they hear that, you know.
Deni Supplee: I am just going through something like this with my mother and they look back five years. Yes.
Sayge Grubbs: Yes. It’s crazy. Yes. And so, what happens is they look back over five years just to see what this person’s done with their money for five years. And I tell people, so, for instance, you may have a habit of giving every grandchild one hundred dollars. That Medicaid person may look and go, wait a minute, these are uncompensated gifts. So now we’re going to penalize you for giving out those Christmas gifts. And what I found was I would have people, you know, sometimes they would send them to me from the facility or sometimes dementia friendly or someone would send them to me and they would just be taken aback by the fact that the only way mama or daddy could qualify was if Medicaid got to lean on the house and they’re saying, well, wait a minute, we’ve already spent a lot of mommy and daddy’s money because they were in an assisted living or independent living or we had people come into the house and help and now we got to give the house away. That’s not something that sits well with people, you know. And so, when covid it happened. A lot of people woke up and they were like, well, let’s do a state plan, let’s get this done, let’s get that done. But also, what happened was a lot of people pulled family members out of facilities and then they had to pay out of pocket for them to be kept at the house.
Sayge Grubbs: Right. Or they were keeping them themselves or help them out. But then when they got ready to put them back in the facility, you know, they might not have initially qualify for Medicaid. And now they’re going, OK, we can get qualify for Medicaid now because we’ve spent a bunch of money. Well, that lean on the House thing, that hurts, right, and what they found out was if you don’t sell that house in the right way, then you can mess up mama or daddy getting qualify for Medicaid. And if they are a veteran and will qualify for what’s called VA aid and attendance, you can mess that up also. Wow. So, what I was able to do and the reason why I say this is a national thing, I know Medicaid’s national I’m in a lot of different national legal organizations where we just concentrate on helping the elderly but also help real estate investors. And so, I kind of found that hole, that gap where I was like, these people have houses and they are motivated sellers. These people have cash or can get their hands on cash, and they want a good deal on a house or property.
Deni Supplee: Let me ask you this, though. So, if somebody comes, they buy their house with cash, there’s still a paper trail, and what not so with the Medicaid. Will people still see that transaction? Yes.
Sayge Grubbs: So, here’s the thing. This is where, you know, it’s like the perfect storm for me personally, because all of my expertise on helping these separate types of clients now mesh. The thing is, this I understand that Medicaid is a federal program, that each state partners with Medicaid in order to kind of create their own local state type of program. Right. But the basics are federal and that’s the key. The basics are federal. So, it doesn’t matter what state you’re in. There are certain things like the five year look back and things like that that are just basic. So, getting rid of the house is a way to ensure that people can receive an inheritance who normally would not have. And there are certain things that I know how to do just because I’m a law Medicaid plan and asset protection, real estate asset attorney to where I can take those basic rules and help them find, you know, an investor or someone to take the property and they get a discount on property and then still put a plan together for them to get on Medicaid and for them to know how many months they may have to pay out of pocket or how many months is going to take for them to actually get Medicaid to pay for them to be in the facility.
Deni Supplee: Now, let me ask you this. Somebody who is not quite a senior yet, but is approaching that area, you know, 60s or what-not, would you be able to help them put strategies and plans in place that they would be able to, bypass some of these things ahead of time?
Sayge Grubbs: Yes, certainly so there’s no time like the present, the plan, right? So, we use some asset protection trust. I like to CYA trust, and we use that trust a lot of times to go ahead and protect things like your house and things like that. So, when you do it early enough that five years has passed, and since that five years have passed, Medicaid cannot see what’s actually in your trust by the time you get ready to apply. So, you know, it’s like you have a secret box. Whether it could have one hundred dollars in there are going to have a million-dollar mansion in there. The thing is, you did it a long time ago, you know, five-plus years ago. And so, at that point, they don’t have a right to say anything about it.
Deni Supplee: Gotcha, ok.
Sayge Grubbs: Especially for real estate investors, because real estate investors, a lot of times, you know, they try to liquidate as they get older, or they try to give it to the family or things like that. If you, do it through a trust. Right. Like your LLC or whatever you own can actually be owned by a trust, which adds a complete double layer of asset protection. And it’s the best way, actually, to protect yourself as a real estate investor and to completely separate your personal liability from your business liability of actually being a real estate investor. I always called the LLC trap because people don’t understand, even though you may have an LLC or escort, that is still a personal interest. And because it’s a personal interest, I always tell people that’s not a true separation of your personal from your business because of your personally attacked, that personal interests can be attacked also.
Deni Supplee: Right, right. I remember you saying that before and some of our broadcasts together. So, what exactly can people that are watching and real estate investors that we know, what can they do to protect themselves? and how do they contact you?
Sayge Grubbs: Yeah. So CYAstrategies.com
Deni Supplee: I did the link and the chat just for anybody.
Sayge Grubbs: All right. There’s a form on there. You can fill that form out. And you know, if you are a real estate investor and you’re like, hey, I need to figure out how to protect myself because all I have is LLC’s or houses in my own name. And I would like an added level of protection. You know, we’re there to help you put a CYA strategy in place. If you are a real estate investor and you come across a realtor because realtors don’t understand Medicaid is not their job. And, you know, even if you’re working with the realtor, that’s a senior real estate specialist, they don’t understand Medicaid. They understand the issues of seniors, but not necessarily how to get them to qualify for Medicaid. Right. So, if you come across those things, you go in there, fill it out. We’ll be happy to help. If you are a caregiver and you’re like, hey, I need help with mom or dad, and I’m thinking about putting them in the facility. And of course, their biggest asset is this house. Right? Know. And even if it’s not the biggest asset, a lot of times the House may not be the biggest asset when you start going down this path. But by the time you spend all the money, and you know, you liquidate stuff and you go through the medical bills, at some point that house becomes the biggest asset. And most people just do not want to just hand that house over to Medicaid. Right.
Deni Supplee: And how often do you see this changing? Yeah, it’s the governments that are changing daily. I mean, but like the five years look back, how long has that been in effect?
Sayge Grubbs: Five-year Look back has been there for about a decade. OK, yeah, it’s been there for a while. I don’t think they are going to do anything different anytime soon because they’re getting a lot of pushbacks right now with nonprofit organizations basically saying, hey, it needs to be easier to get on Medicaid. Right. And you know what they did a few years ago, if anything, was they actually strengthened Medicaid, being able to come back after someone passes away and opening up a probate and going after the state so they can get paid back, which is called Medicaid recovery. Right. So, they strengthen that up a few years ago and now there’s pushback from that. So, which again, that’s why I like doing to see why strategies to help these people. Case in point, just a quick case study. I had a client who had family here in Alabama and they were in California and the realtor, and the nursing home lady just told them, hey, there was nothing that could be done. They had mom and dad in an assisted living, and they were about to transfer to the nursing home. And they told them, just do what the lady at the nursing home says. Just go ahead and put a lien on the house.
Sayge Grubbs: We’re going to put the money in a pool of trust, and then they’ll just walk in. Well, it didn’t sit well with them with the son because he was like, that’s the house I grew up in, you know. And he said if they didn’t pay anything else when we were growing up, they made sure we had that house, and he did not want to give that house away. So luckily, he talked to a different realtor and that realtor sent him to me and we got that house sold to a cash deal, real estate investor within like 14 days, which is good, because when you’re doing so, here’s another trick. When you’re doing the Medicaid application, you have to be in a facility for 30 days. Right. And you have to list on that application every single thing that you own. So, it gives a house, LLC. It doesn’t matter. Business doesn’t matter. You have a list it all. So, if you get that household within 30 days, you don’t have to put the house on Medicaid application so that put a lid on it because it’s cash, you know what I mean? So, we put a plan in place for them to where, you know, their parents own that house.
Sayge Grubbs: We sold it at a discount, but it was at a discount that we knew Medicaid would accept because we follow their rules. And the investor was elated because they got a great property. And then the family was elated because they realized this house was just going to go to Medicaid, but they were able to put close to 20 grand in their pocket and pay for their mom’s funeral because, you know, mom had not prepaid or anything. And within a few days of being in a nursing home, mom passed away. And they were like Sayge, if we had not done these CYA for seniors at this point, we would be coming out of pocket nine thousand dollars to pay for mom’s funeral. So, they were elated. So that was a family that basically was not supposed to have an inheritance. If they’ve done it the way everybody told them to do it right, they came to us, and we helped them. And, you know, they walked away with a funeral paid for another funeral prepaid for and about 12 grand in their pocket.
Deni Supplee: One more question. Can trusts help in this circumstance? Like if you want to give these things to your kids, like a house, for instance.
Sayge Grubbs: Yeah, a trust is, people get them confused sometimes, but a trust is a real substitute. The main difference is a trust helps you now. OK, so when you’re doing any type of asset protection or any type of planning, you would like to have a trust involved. The trick is you have to have the right trust involved. There’s a lot of trust gurus out there. You’ve got to be careful where you get your trust from. I had a guy come in a month ago and he bought a trust offline. I’m not going to say the name of the company, but he brought it to me to read because he couldn’t get a bank to actually accept this trust. And the first thing I read was this trust, which is a red flag, says that it can’t be created by an attorney. All right. Well, trust law itself is federal law. So, you would want an attorney to create something under federal state law then. This trust also said that it wasn’t governed by any state law. It was governed by nature, by nature. And at that point, I just looked at it and I said, you basically got it robbed.
Sayge Grubbs: That’s, you know like that was my legal opinion at that point, was you were robbed, and he paid good money for that trust. But you have to find the right type of trust. And the trust that we use is asset protection trust. But it allows you to actually be in control and be the trustee. A lot of asset protection trust doesn’t allow you to be in control and be the trustee, who cost you extra every year because now you’ve got to pay somebody to do things on your behalf. But the one we use; you actually get to be in control. And it does its job in that you don’t necessarily have to ask your CPA or your attorney or what have you and you still enjoy asset protection, and you still can receive the income out of the trust of your LLC. So, it’s the best of both worlds, you can have your cake and eat it, too. I like to say you can own the business completely separate it our own house and completely separate it from your personal assets and stay in control. Right.
Deni Supplee: Wow. Well, with that being said, we got to close up soon, but I would like everybody to know your contact information we do have the link that you can go and fill out a form and Sayge, will contact them, correct?
Sayge Grubbs: That’s right. Yes. send an email and we will get in touch with you.
Deni Supplee: So, and that’s for any kind of questions, not just great with all asset protection. So., I know. I know. He’s helped a lot of people. I know. So, reach out to him and I thank you so much. I thank you. Because this is something that everybody needs to know.
Sayge Grubbs: Thank you. Thank you. And I’m excited because CYA strategies were just getting started. But like I said, I’ve been doing this for a while, and I just saw the hole there where you have real estate investors looking for motivated sellers and you have families who are motivated. But the last thing they want to do is mess up mom or dad chances and actually getting on Medicaid, you know, or getting on VA Aid Attendance. And you know and actually, to me, it’s a win-win for everyone, right?
Deni Supplee: Absolutely. It’s all about protecting yourself. I mean, you work hard for the stuff. You certainly don’t want to lose it.
Sayge Grubbs: Give it away. Yeah, that’s what I was like, I have not met a family yet who just said, I don’t care. I’ll just let the government or whoever take it and have it.
Deni Supplee: That’s for sure. Thank you again, Sayge. Thank you, everybody, for joining us. The link is in the chat, and you all have a nice Tuesday. And thank you again Sayge. Thank you.
Sayge Grubbs: Bye Brian wherever you are.
Deni Supplee: He’s camping,
Sayge Grubbs: oh, there we go, world traveler.
Deni Supplee: Everybody have a nice day. You are too.
Brian Davis: Did you know we offer a free eight video course on how to reach financial independence with real estate? It’s super bendable with each video around 10 minutes long, but packed with information, visit Sparkman on dotcom, learn for instant access. And please don’t forget to write and review our podcast on iTunes, Stitcher or wherever you listen. Thanks for joining us. And we will catch you on the flip side.