5 Ways to Plan for Long Term Care
Three major estate planning goals top the lists of most estate planning clients: Reducing estate taxes, avoiding probate and providing for loved ones after passing. However, with the federal estate tax exemption remaining so high ($5.25 million), many clients don’t have this concern.
In actuality, most do not have an estate this size. That being the case, securing a long term caring (LTC) plan for the principal is becoming the newest trend in estate planning. Doing so requires not only legal expertise but also requires an experienced financial advisor with the appropriate products to help.
Two major dilemmas surface when an individual begins to plan for long term care. First, how will you pay for the service of long term care for the rest of your life? Additionally, what will be left for your heirs afterwards? Long term care insurance is very costly and recently major insurance companies have announced significant premium increases. Waiting for the government to step in and help also seems to be a hopeless dream. So what can the concerned individual do in an attempt to prepare? Listed below are a few things to consider as you ponder the predicament:
1. Self Payment. For those of substantial means, paying directly for LTC may be your best choice.
2. Attempt to self-insure. Begin putting funds aside in an interest-bearing savings account that is earmarked for long term care. Once enough is put aside, you may be able to fund the costs directly or perhaps an annuity can be purchased that will offset the substantial LTC costs.
3. Purchase LTC insurance – A consultation with your estate planning and financial professionals will educate you on the products available. The essence of each product may differ, so understanding exactly how the product works, length of coverage, what it covers, etc. is essential.
4. Qualify for Medicaid – Although typically, only the very poor are eligible for Medicaid, there are ways to increase the likelihood you will qualify. It is crucial to work with an attorney who has expertise in the state laws that govern Medicaid and how to reduce your asset base and income to become eligible.
5. Military assistance – If you served in the U.S. Military during wartime, an individual may qualify for “Aid and Attendance” benefits. Once again, there are asset and income limitations, so consult with your estate planning attorney to increase your chances to qualify.
The LTC plight in our country is something that most will have to address during the course of their life. Exploring both private and public options to cover the costs are necessary to ensure you will be taken care of through your golden years.