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5 ways to start planning for your long-term care needs

On Behalf of | Jan 4, 2023 | Estate Planning |

The chances that you’ll need some sort of long-term care in your life is significant. In fact, some studies show that individuals aged 65 and older have a 70% chance of needing long-term care. Some of that care is home-based, while some of it involves a stay in a nursing home or other long-term care facility.

And the costs associated with this long-term care is extensive, too. Those who are forced to pay out of pocket for a nursing home stay can end up shelling out tens, perhaps even hundreds, of thousands of dollars per year. Even if you’ve worked hard to accumulate wealth over your lifetime, these expenses can leave you utterly devastated from a financial perspective, which means that your loved ones may be left with nothing to inherit.

Planning for your long-term care needs

As apocalyptic as that may sound, the world isn’t coming to an end because of your potential long-term care needs. In fact, you can take steps now to start planning for your long-term care needs while also protecting your assets. Let’s take a look at some of those steps here:

  1. Start early: If you’re hoping to reduce your assets to the point where you qualify for Medicaid, you need to start planning as early as possible since there’s a lookback period that may affect how your eligibility is determined. If you wait too long to start planning, you may be denied access to the resources that you need.
  2. Consider long-term care insurance: These policies can be very helpful in the event that you need long-term care. However, they can be expensive, and not knowing the details of your policy could leave you in a position in which your future claim ends up denied. So, be careful as you analyze whether one of these policies is right for you.
  3. Create a power of attorney: Many individuals who need long-term care end up in a nursing home or facility because they’re unable to take care of themselves and make important healthcare decisions. You can protect your interests here by creating a power of attorney that names an individual who will be responsible for making those decisions on your behalf in the event that you become incapacitated. This can shape what your long-term care will look like should you end up needing it.
  4. Consider an annuity: Purchasing an annuity is a quick way to reduce your assets so that you qualify for Medicaid. Essentially, you pay a bulk sum to an annuity company, thereby reducing your assets, while you or your spouse receive periodic payments in exchange from that annuity. Therefore, you still receive financial support while obtaining the care that you need.
  5. Use an irrevocable trust: By placing assets in an irrevocable trust, you essentially relinquish ownership over them. Therefore, those assets won’t be taken to pay for your long-term care needs. This estate planning vehicle allows you to keep your wealth in your family while disallowing it from impacting your ability to receive the care that you need.

Developing the plan that’s right for you

 We know that thinking about your potential need for long-term care can be stressful and downright scary. But you can reduce the uncertainty and the fear factor by taking control of the situation through sound estate planning.

If you want guidance on how to start the process and how best to use it to your advantage, now may be the time for you to reach out to a legal professional of your choosing to discuss the matter further.