Wealth Preservation & Long Term Care

Within the context of Elder Law, one of the key concerns we address is a strategy for preserving your wealth and other assets so they are not depleted in the face of long term care costs. Depending on your assets, income stream, and health situation, there are various strategies to consider.

Private Pay

One of the first things to consider in preparing for the eventuality of long term care is not only what your assets will be, but what your income stream will be. Ultimately, if your assets produce enough income to cover all long term costs for you and your spouse, it may make sense to simply plan in advance. This planning might include modifying your home ahead of time or buying into a senior living community.

Even with a large income stream, be sure you understand the real cost of long term care. It is not unheard of for advanced stages of care to cost individuals more than $100,000 per year. For this reason, usually only more affluent clients choose private pay. Proactively plan with your attorney and financial adviser to be certain that private pay is the correct option before taking any steps.

Long Term Care Insurance (LTCI)

For those who start early enough, Long Term Care Insurance (LTCI) can be an excellent option as part of a holistic estate plan. LTCI may be obtained on its own or as part of a rider on a different policy. The policy provides coverage for in-home care, assisted living, nursing homes, and most other long term care situations. The main benefit to LTCI is that it covers long term care expenses ahead of time and ensures that they do not eat into your assets.

This strategy is recommended most often in your fifties and sixties. Roughly 54% of LTCI policies are obtained between the ages of 55 and 64, but it can make sense to consider a policy earlier or later than this, depending on your situation. The two major drawbacks to LTCI are that it can be cost prohibitive when not obtained far enough in advance and, even if you can afford it, you must qualify for coverage in the underwriting process.

Medicaid Asset Protection Trust (MAPT)

If you do not have enough of an income stream in retirement to cover long term care costs privately, and you also cannot afford or otherwise qualify for LTCI, your assets are at risk of being depleted before you qualify for any assistance. An option that has been effective for many in this situation is an irrevocable Medicaid Asset Protection Trust (MAPT). In short, you identify assets susceptible to being "spent down" by Medicaid before you qualify for benefits, and protect those assets by placing them into a trust. To learn more about the MAPT strategy, see our section on it here.