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Four ways to ensure that you can pay for long-term care

On Behalf of | Sep 23, 2022 | Estate Administration, Estate Planning |

The chances that you’ll need long-term care at some point in the future is probably higher than you realize. In fact, someone turning 65 has about a 70% chance of needing some sort of long-term care in the future. And this long-term care can be extraordinarily expensive, costing tens of thousands of dollars each year. With such exorbitant costs, long-term care can quickly eat through the resources that have required a lifetime to build. The result, then, is that you may be left with very little, if anything, to give your loved ones when you pass away.

Planning for long term care while protecting your assets

Fortunately, there are some estate planning strategies that you can implement to try to shield your assets while still protecting your ability to secure the long-term care that you may need. Here are some of your options:

  • Lifetime gifting: If you want to have Medicaid help cover your long-term care costs, you have to reduce your income and your assets to ensure that you meet the financial requirements to qualify for this program. One effective way to reduce your assets is to give them away while you’re still alive. Under federal tax laws, you’re able to give away about $16,000 per individual per year without facing any sort of tax consequences. This allows you to give away a large portion of your estate without having to pay to do so, thereby reducing your assets so that you qualify for Medicaid while allowing you to see your loved ones enjoy the gifts that you have given them.
  • Miller trust: This type of trust, sometimes referred to as an asset protection trust, allows you to reduce your qualifying assets for Medicaid eligibility purposes. It works by placing the assets in the trust, at which point you lose access to them. Those assets are then used to make payments to Medicaid for services that are rendered to you. So, although this type of trust may not protect all of your assets, it does help ensure that you’re able to access the treatment and care that you need.
  • Long-term care insurance: Another option that you may be able to utilize is long-term care insurance. These policies can be a little pricey, and you need to make sure that you understand the breadth of the policy’s terms before you sign off on it, but it is a viable way to better protect yourself from the costs associated with long-term care.
  • Reverse mortgage: Some people who find themselves in immediate need of money to cover their long-term care insurance turn to the equity that they’ve built in their home. This may not be the best option for you, but it is something to be aware of in the event that you need quick access to cash.

Developing the estate planning strategy that’s right for you

There are a lot of different ways to approach your estate plan. If you want to achieve the outcome you desire, you have to find a strategy that works best for you and your family under the circumstances. That can be a daunting prospect. After all, it’s hard enough to confront your own mortality, let alone think about how you’re going to provide for your family once you’re gone.

But that’s why law firms like ours are here to help. So, if you want to alleviate some of the stress associated with estate planning, now may be the time for you to reach out to a legal team of your choosing to discuss the matter further.