As we get older, many of us will require some type of long-term care. Whether it’s assisted living, nursing home care, or in-home care, the costs associated with these services can be devastating to your estate and legacy plans.

With a private room in nursing homes costing over $100k annually, and growing at a rate approximately double the inflation rate, it doesn’t take long for you to burn through your savings.

However, there are options to protect assets from long-term care expenses like:

  • Insurance
  • Trusts
  • Hybrid life insurance policies
  • And Medicaid planning

Having a clear picture of these options and planning will make sure you get the care you need in the future while your legacy endures.

At Brogan Financial, we aim to safeguard your future, and your understanding of how long-term care costs affect your estate and legacy plans is an important part of it. We’ll help you come up with strategies to protect your assets without putting your future care in jeopardy. Let’s get started.

Understanding Long-Term Care Costs:

Long-term care costs can vary significantly depending on the level of care required and the geographic location.

According to Genworth’s Cost of Care Survey in 2021, the national median cost for a private room in a nursing home is over $100,000 per year. When you take inflation into account, that amount will only increase in the future.

Assisted living facilities, on the other hand, can range from $50,000 to $60,000 annually, while in-home care can cost anywhere from $50,000 – to $150,000 per year for around-the-clock care..

If you or your loved ones require long-term care, the associated costs could quickly drain your savings and assets. Without a proper strategy to combat this, it could leave little to no inheritance for your heirs, potentially disrupting your legacy plans.

If your assets are depleted, you may need to rely on Medicaid to cover the costs, which could limit your care options and quality of life. Not good!

Strategies to Protect Your Assets:

You can’t overlook healthcare costs during your retirement years, but protecting your assets is just as important.

To protect your estate plans and ensure you get all the care you need in your future, you need to put a solid strategy in place. Here are a couple of tips to help protect your assets against long-term care costs:

1.   Long-Term Care Insurance:

Purchasing a long-term care insurance policy can help cover the costs of long-term care services, shielding your assets from depletion. These policies typically provide a daily or monthly benefit to cover various care options, such as nursing homes, assisted living facilities, and in-home care.

2.   Asset Protection Trusts:

An asset protection trust can help safeguard your assets from long-term care costs. By transferring your assets into an irrevocable trust, you can remove them from your estate, making them inaccessible for Medicaid qualification purposes.

This strategy can help preserve your legacy and shield your assets from creditors while still providing for your care needs.  For legal services such as an asset protection trust, you should work with a well-qualified elder law attorney.

3.   Life Insurance with Long-Term Care Riders:

Some life insurance policies now offer long-term care riders. These riders allow you to access a portion or all of your death benefit while you’re alive to help cover long-term care expenses. This can help protect your current assets while still providing a legacy for your heirs.  Many policies also offer the option of adding extended long-term care benefits once you deplete the death benefit.

4.   Medicaid Planning:

Medicaid is a government program that provides long-term care coverage for individuals with limited assets and income. To qualify for Medicaid, you’ll need to meet specific financial criteria. Each state has specific thresholds regarding assets and monthly income to meet.

Consulting with financial experts can help you explore strategies for Medicaid planning, such as spending down your assets or using trusts to protect your assets while still qualifying for benefits.

5. Self-pay

Some can afford to pay the cost out of their income and investment assets.  However, it’s crucial for these individuals and couples to properly understand the potential costs, and consider the high inflationary costs of Long Term Care services.

Many who feel confident about self-funding their long-term care often purchase some nt asset-based protection to provide a baseline of benefits (with an asset-based plan, if the benefits are not needed for long-term care, the beneficiaries of the owner can receive an income tax-free death benefit.  

6. Consult a Financial Advisor

Watching lifetime savings drained by long-term care costs can be gut-wrenching, especially when it leaves little behind to pass on. But with some careful planning, there are ways to make sure your financial legacy and wishes endure in the manner you desire – even if care needs arise.

Consulting with a professional and seeking advice can help you implement strategies to secure your assets.

Work with Us

At Brogan Financial, we make sure your retirement life is spent getting the care you need without worrying about your finances.

Schedule a consultation, and let us help make sure your legacy is preserved for future generations.

For weekly financial tips and insights, don’t forget to tune in to ‘More Living with Jim Brogan’ every Saturday morning at 9 only on 98.7 FM WOKI.