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How estate planning can help you afford long-term care

On Behalf of | Jul 3, 2024 | Estate Planning

As you approach your golden years, you most likely envision a time of relaxation and enjoying the fruits of your labor. As you visualize downing your tools and enjoying the finer things in life, it’s crucial to acknowledge that the need for long-term care may arise as you age.

You may need to enroll in a nursing home or join an assisted living community after retirement. Without proper planning, long-term care costs can become a destabilizing financial burden. Thankfully, you can leverage your estate plan to help ensure you have sufficient financial resources to afford potential long-term care needs.

Planning for the unexpected

Research shows that the average cost of securing a private room in a long-term care facility ranges between $7,000 and $9,000 per month. Depending on how long you might need assistance with your daily needs, these expenses can add up quickly and deplete your life savings. This is where estate planning can make a difference. You can leverage your estate plan to establish a safety net that helps you access quality care without depleting your entire estate.

The most straightforward strategy you can use to anticipate long-term care costs is creating a long-term care fund. Designating a specific account for potential long-term care needs can incentivize you to set aside sufficient funds for this purpose. You can use various financial resources for this, including:

  • Savings account
  • Investments
  • Long-term care insurance

Another good strategy is to establish an irrevocable trust to separate long-term care funds from your estate. This way, you can help ensure that your savings do not disqualify you from Medicaid. These government resources can help you cover any medical costs that may arise during your golden years.

Speaking of qualifying for Medicaid, the state and federal program has some strict income and asset criteria you should be aware of. Through estate planning, you can implement spend-down strategies to help ensure that your estate meets Medicaid eligibility requirements. With appropriate legal guidance, you can explore:

  • Passing down assets to close family members
  • Investing in exempt assets
  • Choosing the right trust for your unique needs

Following legal channels when spending down your estate can help you avoid any complications when exploring Medicaid resources.

As you approach your golden years, estate planning is an important task, partially because it can help you afford potential long-term care costs. With appropriate legal guidance, you can set up a comprehensive strategy that includes funding strategies, trusts and Medicaid planning. This way, you can protect your assets and help ensure that you receive necessary care without financial strain.