Long Term Care Costs: How to Protect Your Estate

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A question many retiring Baby Boomers are asking is how to prevent long-term health care costs from depleting their estate. We found a story that offers some helpful tips.
The goal when you retire, “is to have ‘six circles of wealth’ spinning at the same time, creating momentum for your money,” writes John Jamieson. “Few people have all the circles covered.” The six circles of wealth are:

  • Income and cash flow
  • Investments
  • Guaranteed income
  • Cash and liquidity
  • Long-term care
  • Your estate

“The only circle that can cannibalize the others is long-term care; it’s also the circle that’s most neglected,” writes Jamieson. “Unless you were smart enough to have bought a quality life insurance product years ago, you could leave nothing behind for your family.”

When you consider long-term care costs on average $7,200 a month per person, many people are buying a long-term care insurance policy, which can cost as little as $1,000 to $2,000 a year. That beats your nest egg paying more than $80,000 annually for the costs of long-term health care.

What are some other options?

One is savvy estate planning. “There are ways to structure your estate that lessens any blow from the cost of long-term care,” writes Jamieson. “This usually involves getting rid of assets via gifts and trusts before you need long-term care but this type of planning can be viewed as controversial.”

A safer alternative is to allocate some of your funds into products that are built to help you with the cost of long-term care. One example is a strategy called asset-based long-term care, which could be as simple as putting money into a properly structured annuity. The annuity is set aside to pay for your long-term care and if you never need it, your family receives the money.

Many people are also setting up whole life insurance policies well into their 50s and 60s, “They provide your estate a guarantee so if you need to sell off assets to pay for care, you still leave behind a legacy for your family,” writes Jamieson.

Read the story here.



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