When you have been planning for retirement and it is coming into focus, you may have a pretty good idea of what you will be able to leave to your loved ones. You have anticipated your retirement budget, and you have considered contingencies, so you feel comfortable.
Of course, there are those that have not planned exhaustively, but they expect to be able to pass along suitable legacies. Unfortunately, we have found that there is one expense that a lot of people overlook, and it can have a devastating impact on your inheritance plans.
Put Aging in Perspective
You would not be able to fully grasp the way that you feel right now 20 years ago, and this the way of life. When you are in your 60s, you won’t be able to envision exactly how things will be when you are in your 80s.
Once you are 67, your life expectancy is at least 85 years depending on your gender, so you should proceed with this understanding. Over 30 percent of the oldest old contract Alzheimer’s disease, and many others are unable to handle their own needs for different reasons.
The United States Department of Health and Human Services tells us that 35 percent of seniors will reside in nursing homes, and over 50 percent will incur some type of long-term care costs.
Will Medicare Help?
Medicare will come to mind when you hear about long-term care costs, and this is understandable. It is the country’s health insurance program for seniors, and the statistics indicate that most senior citizens will be inundated with long-term care bills.
In fact, Medicare does not cover a stay in a nursing home, and it will not pay for in-home care or an assisted living facility. The median annual charge for a private room in a nursing home in Hartford last year was just under $180,000, and one year is the average length of stay.
For a home health aide, you are looking at $67,000, and these costs went up by 17 percent year-over-year. If the increases persist, the costs will be far greater years from now.
When two married people require nursing home care, the family expenses are doubled, so this is a major threat to your legacy unless you have very deep pockets.
Elder Care Planning
You can address this looming challenge if you work with our firm to develop a nursing home asset protection strategy. It will revolve around Medicaid eligibility, because this program will pay for long-term care.
This is a need-based benefit, so you cannot qualify if you have more than $1600 in assets that are accountable. In spite of the way that sounds on the surface, there are steps that you can take to prepare for eligibility while you maintain your lifestyle.
An irrevocable, income only Medicaid trust is the widely embraced solution. As the name would indicate, you cannot revoke the trust or access the principal after it has been established. However, you can accept distributions of the earnings from income producing assets in the trust.
This can allow you to live comfortably, and many people have no intention of spending the source of their retirement income. As a result, nothing would really change, but the assets will be out of your name for Medicaid eligibility purposes.
You could also convey your home into the trust to protect it during the Medicaid recovery phase. A homeowner can qualify for Medicaid, but they can put a lien on the home after the beneficiary’s passing. If it is held by the trust, it would not be part of the estate, so it would be protected.
Attend a Complimentary Seminar!
As you can see, your estate plan should definitely include an elder care planning component. If you would like to obtain more details, attend one of our seminars. There is no charge, and you can visit our seminar schedule page to see the dates and registration information.
Need Help Now?
Our attorneys would be glad to help if you are ready to engage a Glastonbury, CT estate planning lawyer to develop a plan for aging. You can send a message through our contact page to request an appointment, and we can be reached by phone at 860-548-1000.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.