Protecting Your Estate with LTC

Good news: Thanks to medical advances in the past few decades, you -- and your parents, if they're still alive – will probably live longer than previous generations.

Bad news: The cost of living in a nursing home for a year, now averaging around $51,000, will triple over the next 20 years, according to the General Accounting Office. So will the cost of other long-term care (LTC) – such as assisted living and skilled home care.

Start planning now if you want to be sure that you can afford the care you'll need as you age – without depleting the wealth that you hope to leave to your heirs. Most important, decide whether you can afford to fund LTC out of your personal assets or whether to buy LTC insurance to cover it. If you choose insurance, you'll have to decide whether to start paying premiums now or wait until you're older.

Coverage

LTC insurance typically cover a broad range of services other than hospitalization—including nursing-home care, assisted living, in-home health care and, sometimes, adult day care. (Your health insurance will still cover hospitalization and short term illness).

The choice between self-funding and LTC insurance depends on your:

•  Financial Situation (disposable net worth and income).

•  Age, and

•  Health Condition

Net Worth & Income

If your disposable net worth is more than $3 million ($6 million for a couple) then you may be able to cover the cost of LTC out of the interest and dividends that you earn and preserve the principal for your heirs.

If you don't think you'll be able to fund long-term care on your own, consider buying insurance for it. (Depending on your adjusted gross income, you may be able to fully or partly deduct qualified LTC insurance premiums as a medical expense).

LTC insurance varies widely in coverage, premiums, exclusions, inflation protection, duration of benefits, and other provisions. So investigate your options carefully before choosing. We will be happy to help you decide how to fit LTC plans into your overall estate plan.

Source: Legal Alert, published by Axley/Brynelson, Madison