Many people, when they hear the term “estate plan,” think of a will or a trust designed to pass assets down to your loved ones after you’re gone. This is indeed a vital part of what estate planning does, but modern-day estate plans are much more comprehensive than “I leave my record collection to my son and my furniture to my daughter” instructions of the past.
There are key parts of today’s comprehensive estate plans that might have not been considered previously. Most people now have plans to not only cover their assets, but also their care while in their later years. For example, health care directives and powers of attorney are now vital for most people as a way to ensure that your wishes are followed with regards to necessary medical treatment, resuscitation/end-of-life care and finances when you are no longer able to make important decisions on your own.
Of particular concern to many people is careful estate planning to deal with the possibility of long-term care.
Financing long-term care
The U.S. Department of Health and Human Services reports that 7 out of 10 people over the age of 65 will need long-term care at some point, and that average costs for that care run between $3,000 and $8,000 per month. Given that life expectancies have been steadily climbing for years now, we could easily spend years in long-term care, and the costs could be astronomical.
It is possible to structure your estate plan in such a way as to either remain eligible for important government benefits (namely Medicare, Medicaid or state equivalents) to help cover costs associated with long-term care. There are income and asset maximums at which point you no longer qualify for these benefits, so it is important that you either give away assets or structure them in a trust in order to preserve eligibility.
Another way to finance exorbitant long-term care costs is through the purchase of annuities or long-term care insurance policies. Since these will have an ongoing cost, it is important that they be accounted for in the overall estate plan. Many insurance policies are only available for relatively healthy people under a certain age (typically younger than 70), so they must be purchased well in advance in order to be an effective source of financial support.
Through a combination of careful planning, forethought and decisive action, it is possible to craft a comprehensive estate plan that provides for the eventuality of long-term care. For more information about this and answers to your estate planning-related questions, feel free to contact us directly at any time.