It’s estimated that someone turning 65 today has an almost 70 percent chance of needing some type of long-term care services in their remaining years. Whether facing retirement in the next few years or helping aging parents navigate their next chapter, the key to a family’s long-term financial security is a bit of careful planning. With October and National Long-Term Care Planning Month on the horizon, there’s no better time to get up-to-speed on the documents and strategies that families need to prepare for expected or unexpected nursing home and in-home care needs.
Estate Planning Documents Every Family Should Have
While “estate planning” sounds like it’s only a practice reserved for the wealthiest people, there are a few essential documents that everyone should have in place as they age, says Michael Wagner, Esq. a partner at Walden-based J&G Law who focuses on elder law, wills, trusts, and long-term planning solutions. “Nearly everyone leaves an estate behind when they die, whether it’s millions, a house, or a checking account. ”he says.
According to Wagner, at minimum, seniors should have a Last Will and Testament, which directs how property will be distributed after death. Equally important is a durable Power of Attorney, granting someone the ability to make financial and legal decisions if incapacity occurs, and a Health Care Proxy with a potential Living Will, which outlines medical wishes. These documents ensure that trusted voices—not the courts—guide decisions when the time comes. “Without these plans, state law and court processes take over,” he says.
Navigating Long-Term Care Costs
Beyond the basics, long-term care and nursing home costs raise more complicated questions. The expense of full-time care can quickly exhaust savings. According to Wagner, Medicare, which many assume will provide coverage, pays for only up to 100 days of nursing care. After that, families are often left to shoulder the full financial burden. Medicaid, however, can step in where Medicare does not, but eligibility requires careful planning, he notes.
“This is why there are so many stories about people losing their homes and savings to the cost of care,” says Wagner. “But it doesn’t have to be this way. With the right planning, you can position yourself to qualify for Medicaid and protect assets for your family.”
One approach to ensuring Medicaid eligibility, he says, is establishing a Medicaid Asset Protection Trust (MAPT), an irrevocable trust that shelters assets while still allowing some benefits of ownership. Because Medicaid imposes a five-year “look-back” waiting period in which no major asset transfers occur in order to qualify benefits, these kinds of trusts work best when created well in advance.
For those without long-term planning in place, Wagner says that emergency measures such as transferring assets to a spouse through “spousal refusal” or using gifting and loan strategies can preserve a significant amount of family wealth.
In addition to Medicaid’s standard nursing home coverage, Wagner says that planning to qualify for Community Medicaid offers another pathway to receiving in-home care benefits that help seniors age in place. Community Medicaid allows more flexibility for families trying to keep loved ones at home.
Learning More About Estate and Long-Term Care Planning
These planning techniques are just the tip of the iceberg when it comes to developing a smart strategy for long-term care. For those looking to learn more, Wagner will be offering a free 30-minute webinar, “Estate Planning Made Simple,” on October 29, which will provide practical steps and tips for getting started, or reviewing an estate plan that is more than five years old.
To register for “Estate Planning Made Simple,” visit Jglaw.law.
