As an estate planning and elder law firm, we speak with people that want to preserve their legacies for the benefit of their loved ones. In addition to the expenses that you would typically anticipate during retirement, long-term care costs are another consideration.
This is something that is often overlooked, partially because it is not a pleasant subject to contemplate. However, when you understand the facts, you can see what this is an issue that you should address head on to protect yourself in the future.
Eye-Opening Longevity Statistics
The Social Security Administration has a life expectancy calculator on its website. When you plug in the numbers for a man who is celebrating his 67th birthday today, you see that his life expectancy would be 85 years. The figure is 87 years for a 67-year-old woman.
If you were born in 1960 or any year after that, you can receive your full Social Security benefit when you are 67 years old. When you put these two facts together, if you live long enough to collect Social Security, your life expectancy is into the mid-80s.
Long-Term Care Likelihood
Just over 50 percent of people that reach the age of 65 will ultimately incur long-term care expenses, and 35 percent of seniors eventually live in nursing homes. When you combine life expectancy with this reality, a clear picture emerges.
Connecticut Long-Term Care Costs
We practice in the state of Connecticut, with elder law and estate planning offices in Westport and Glastonbury. Genworth Financial has been conducting research into the state of long-term care costs around the country for several years.
They are now making projections into the future based on the data they have accumulated. Ten years from now in 2034, the median cost for a private room in a nursing home in Westport, CT will be about $290,000. At the present time, it is over $222,000.
Medicare Won’t Help
A lot of people would digest the information above and assume the cost is not much of a factor because they will qualify for Medicare. This makes sense on the surface, but in fact, Medicare doesn’t cover custodial care.
Long-Term Care Insurance
You could carry long-term care insurance to address these costs, but there are some significant drawbacks. First, the premiums are quite expensive if you obtain the coverage when you are older. In addition, they can increase the premiums along the way.
Secondly, these policies come with so-called “elimination periods.” If you do require long-term care, they do not pay anything until you wait out the period that they prescribed.
This will typically be 60 or 90 days, so you pay for the policy for years and you wind up paying a significant amount out of pocket anyway.
Medicaid Planning
A Medicaid trust is a more complete solution. When you take this approach, you convey income-producing assets into the trust. After you take this step, you can no longer reach the principal, but you can accept distributions of the earnings.
As long as you fund the trust at least five years before you apply for coverage, the principal would not count. After your passing, the assets in the trust would go to the beneficiaries that you name.
Schedule a Consultation Today!
We can help if you would like to work with a Glastonbury or Westport, Connecticut estate planning lawyer to prepare for the future. Your nursing home asset protection plan can be embedded within a broader estate plan that passes along your legacy in the optimal manner.
To set the wheels in motion, give us a call at 860-548-1000 or send us a message through our contact page.
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