Long-term care services, like nursing home care, in-home care, and assisted living, can be expensive. If you are not prepared for these costs, they can quickly deplete your savings. Estate planning isn’t just about deciding who gets your assets when you pass away; it’s also about making sure you’re taken care of while you’re still here.
Protecting your assets through a trust
One effective way to manage long-term care costs is through a trust. A trust allows you to set aside assets that won’t influence your eligibility for Medicaid, which can cover long-term care costs. By placing assets in a trust, you can protect them and ensure they are not spent on care expenses. This allows you to preserve wealth for your heirs.
Utilizing Medicaid planning
Medicaid is a government program that can pay for long-term care, but it has strict income and asset limits. If you have too much in savings or income, you might not qualify. Estate planning can include strategies to “spend down” your assets or restructure them. This way, you become eligible for Medicaid without giving up all your wealth.
Purchasing long-term care insurance
Another option is purchasing long-term care insurance. This insurance can cover many of the costs associated with nursing homes or in-home care. Estate planning involves deciding when and how to purchase this insurance.
Assigning a power of attorney
A power of attorney (POA) is a critical part of estate planning. It allows someone you trust to make financial decisions on your behalf if you’re unable to do so. In the context of long-term care, a POA ensures proper management of your finances. This includes paying for care and protecting your assets according to your wishes.
Looking beyond today
While planning for long-term care isn’t something most people like to think about, it’s crucial for protecting your financial future. A well-crafted estate plan gives you the flexibility to adapt to whatever lies ahead. The peace of mind that comes with this thoughtful preparation can be one of the most valuable legacies you leave behind.
