Long Term Care Awareness
Did you know that November is National Hunger Awareness Month, National Vegan Awareness Month, which my sister would love, National AIDS Awareness Month, Diabetes Awareness Month, and National Long Term Care Awareness Month, among other things?
This week I thought we would take the time to talk about the three biggest misconceptions we, as financial advisors, see around long term care.
3 Misconceptions About Long Term Care
First is that long term care means just nursing homes.
The truth is most long term care is actually provided with in-home care and assisted living. It is not just nursing homes.
In fact, most people would prefer to stay at assisted living or at their home as long as possible.
The second misconception about Long Term Care is that you can’t afford Long Term Care insurance.
Yes, traditional long term care insurance could be really expensive and it might be something that is not appropriate for you. However, there are a lot of options where you can smartly self-insure for long term care, meaning you might be able to put money aside in something where you have access to it if you need it for anything.
And, if you don’t use it, it goes to your beneficiaries.
We call that a win-win-win and this is a way to smartly self-insure without paying a premium.
It’s leveraging money that you already have to provide better care or have more funds available for long term care if you need it, yet have access to it at any time.
If something changes or you decide you just can’t take the northern winters anymore and you’re going to go buy a house somewhere, you could take the money back out and do that.
This has to be structured properly, we have to make sure your income is taking care of your retirement, then, if you don’t need all the assets that you’ve saved in order to create the retirement income you need then it’s very possible that you can leverage some of your other accounts or other assets to provide for long term care coverage.
Now that can be done in a variety of different ways. You could have higher long term care coverage, or higher death benefit, or higher accumulation. We kind of cover some of these tools in our September Power Hour, so make sure you go back and check that out.
Trusts and Long Term Care
The third misconception when it comes to long term care is that if I give all my money away or I put it in a trust then it won’t have to be spent on Long Term Care costs.
We actually just talked about the first option, giving all the money away in our November Power Hour with estate planning Attorney Nails Donovan.
The thing to remember is there is a lookback period when you do this, right now, it’s five years.
So, if you need care within five years of giving things away, they’re going to come back and say, hey, we’re not going to pay for care because you just gave $$$ away.
Even if you’re aware of that five-year look back if something happens and tell your kids to put it aside in an account, it is still part of your child’s estate and subject to their creditors as Nels talked about in the November Power Hour.
So, giving it to your kids doesn’t necessarily mean you just qualify, and putting in a living trust or revocable living trust protects you from other creditors and keeps it out of probate, but you have to do advanced work in order to protect your money from long term care costs and even then, it’s usually not 100%.
If you have questions on that, of course, we have great attorneys on our team that can help with it.
But remember, just because it’s in a trust does not mean it’s protected from long term care.
The biggest thing we want to reiterate as we close National Long Term Care Awareness money is that you can smartly protect yourself and, smartly self-insure with one of the win-win-win type policies.
This is about the estate preservation part of your financial life and is making sure that you retain control not just of your assets but of your care and the choice and where you get it.
The only way to do it is to do some planning now!
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