Proper Planning Can Offset the Costs of Long-Term Care

As you grow older, one of your fears may be that you will need to enter a nursing home facility at some point in the future.

Although nursing homes often provide exceptional care to patients, they come at a significant cost — sometimes $100,000 or more per year. This can wipe out your life savings in a matter of months or few short years. Adding to the problem is the fact that the cost of most forms of long-term care are not covered by typical health insurance policies, Social Security Disability or Medicare benefits.

Using an Irrevocable Trust

Fortunately, there are options an experienced estate planning attorney will recommend to plan for the possibility of long-term care. One of the most highly used tools is an irrevocable trust, in which you place a large amount of your assets and property so that they will not be counted as resources when it comes to paying for nursing home care.

If done right, you can qualify for Medicaid benefits to cover most or all of your long-term care costs, while still distributing your wealth to your loved ones based on your wishes. You may also be able to keep your home, even though you will no longer own it.

To that end, one of the downsides to setting up an irrevocable trust is that once you place assets or property into it, you forfeit most control over them. You would name an executor to oversee the assets within the trust while you are still alive, and that person would also be responsible for ensuring the assets are properly distributed to your beneficiaries. This can make some people uncomfortable.

On the other hand, you may continue to draw income from the trust on a regular basis, giving you ample resources to continue your standard of living for the foreseeable future. Irrevocable trusts can be complex entities, so be sure to consult an experienced living trust attorney to learn about your options and if it’s the right tool for you.

Long-Term Care Insurance

An alternative to Medicaid planning is to purchase long-term care insurance, which essentially covers the cost of a nursing home if it becomes necessary for you to seek this type of care in the future.

Long-term care insurance can be expensive, and the costs may vary widely depending on the insurance company and your age. Nevertheless, it’s recommended that you look at a variety of options before settling on a policy. Providers may also deny coverage for those who are in poor health, so you should try to find a policy as early on as possible.

It’s worth noting that the decision to purchase long-term care insurance coverage should not be taken lightly. The choice you make will impact you well into the future, so you should work with a knowledgeable wills and trusts attorney to look at all of your options and determine the best course of action for your situation.

Schedule Your Free Consultation with Our Experienced Estate Planning Attorney

Einheuser Legal, P.C. is an estate planning law firm in Bingham Farms, Michigan. We help families set up wills and living trusts. Attorney Michael Einheuser is an experienced estate planning lawyer serving residents in Bingham FarmsTroy, Farmington HillsRochester HillsSouthfieldWest Bloomfield Township, and Bloomfield Township.

Schedule your Free Consultation today: (248) 398-4665.