What are Home Caregiving Options for Parents?

January 14, 2022

At least 2.4 million U.S. workers provide in-home personal and health care for older adults and people with disabilities. That number has more than doubled since 2010, according to PHI, a New York–based nonprofit advocacy group that works to improve the quality of direct-care services and jobs. What are the best home caregiving options for your parents?

AARP’s recent article entitled “How to Hire a Caregiver” says that a shift in long-term care from institutional settings like nursing facilities to those aging in place in their own homes and communities has fueled the growth. This is also likely to continue as the population ages. The U.S. Census Bureau projects that the 65-and-older population, which was just over 54 million in 2019, will grow to 94.7 million by 2060.

There are several types of paid in-home caregivers that provide a range of services.

Personal Care Aides. PCAs aren’t licensed and have varying levels of experience and training. They serve as helpers and companions. They can provide assistance with bathing, dressing and do some housekeeping, as well as transportation to shopping and appointments. Training requirements for caregivers vary by state, and some states have no formal standards. This will be an out-of-pocket expense because Medicare or private health insurance typically doesn’t cover them.
Home Health Aides. HHAs monitor the patient’s condition, check vitals and assist with activities of daily living, such as bathing, dressing and using the bathroom. HHAs also provide companionship, do light housekeeping and prepare meals. This group must meet a federal standard of 75 hours of training. Their training and certification varies by state.
Licensed Nursing Assistants (LNAs) and Certified Nursing Assistants (CNAs). LNAs and CNAs observe and report changes in the patient, take vital signs, set up medical equipment, change dressings, clean catheters, monitor infections, conduct range-of-motion exercises, offer walking assistance and administer some treatments. Any medical-related tasks are performed as directed by a registered nurse (RN) or nurse practitioner (NP). CNAs also provide help with personal care, such as bathing, bathroom assistance, dental tasks and feeding, as well as changing bed linens and serving meals. As with home health caregivers, federal law requires nursing assistants to get at least 75 hours of training, but some states have other requirements.
Licensed Practical Nurses (LPNs). These skilled nursing providers have to meet federal standards for health and safety and are licensed by states. They evaluate, manage and observe a senior’s care and provide direct care that nonmedical and home health aides can’t. Their tasks could include administering IV drugs, tube feedings, and inoculations; changing wound dressings; and educating caregivers and patients. Some LPNs are trained in occupational therapy, physical therapy and speech therapy. Medicare covers home health skilled nursing care that is part-time or intermittent, doctor-prescribed and arranged by a Medicare-certified home health agency.
Registered Nurses (RNs). This group has a nursing diploma or an associate degree in nursing. They’ve passed the National Council Licensure Examination and have satisfied the other licensing requirements mandated by their state’s nursing board. RNs provide direct care, administer medications, advise family members, operate medical monitoring equipment and assist doctors in medical procedures.

These are some of the best home caregiving options for your parents. Work closely with an elder law attorney to ensure you have all of the options available to you and your family. If you would like to learn more about home care, and other long term care issues, please visit our previous posts.

Reference: AARP (Sep. 27, 2021) “How to Hire a Caregiver”

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Ways to Avoid a Succession Fight

January 13, 2022

Far too often businesses fail because there was not a plan in place to succeed the owner or CEO. There are ways to avoid a succession fight. A comprehensive succession plan is a set of legal guidelines to ensure an orderly transfer of financial control and executive responsibilities to a new generation of leaders. Index Fund Advisors’ recent article entitled “How to Avoid a Messy Succession Battle” suggests that you take a multi-prong approach to succession planning.

A business owner must identify the individual who has the skills to run a business. A succession plan can sometimes divide the leadership roles, with one person running the business and another in a senior role overseeing long-term development and planning.

Business owners also must consider their personal estate plans when devising a succession plan. Business owners need to be proactive about estate planning and succession planning. Ask an experienced estate planning attorney about both processes as ongoing strategies. That means you don’t create an estate plan or a succession plan and file it away until you want to retire. Circumstances can change, so you’ll probably periodically need to review it and make sure everything is up-to-date.

When multiple owners are involved, a succession plan should create rules and procedures for other owners who might want to hire friends and relatives for key positions. The company’s founders must consider what happens if an owner gets a divorce, suffers a disability, or declares personal bankruptcy. These types of situations can change the rules within a buy-sell agreement—the master document that details the rules between who gets what and how a company is organized in the future.

A succession plan can also state the rules for issues involving transferring of equity and/or shares of a company to family members. In addition to putting into writing exactly who can be a transferee and the amount of equity they’re allowed, business owners should use the succession planning process to address issues related to voting rights. A succession plan should also specify the financial terms at the time of an owner’s death or sudden exit.

While avoiding such a decision-making process might appeal to younger executives, delaying these decisions and processes creates more uncertainty in a company’s ongoing success.

Whatever the size of a business, any business owner needs to create a succession plan sooner rather than later. If you don’t, you may not be able to avoid a succession fight for the next generation of owners and employees. If you would like to learn more about business succession planning, please visit our previous posts.

Reference: Index Fund Advisors (Nov. 22, 2021) “How to Avoid a Messy Succession Battle”

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Understanding how a Life Estate works

January 12, 2022

A life estate allows two or more people to jointly own real estate property. It can be complicated, so it is important to have an understanding of how a life estate works. Parents often use life estates to leave the family home to children, while remaining in the house for the rest of their lives. However, sometimes things don’t work out as intended. If and how changes may be made to a life estate is the focus of a recent article “How to Remove Someone from a Life Estate” from Yahoo! Finance. For the life estate to be flexible, certain provisions must be in the document when it is first created. An experienced estate planning attorney is needed to do this right.

One person, referred to as the “life tenant” has ownership of the property for as long as they live. The other person, called the “remainderman,” takes possession only after the life tenant’s death. Multiple people can be named as life tenant and remainderman. However, the more people involved, the more complicated this arrangement becomes.

The remainderman has an unusual position. They don’t have full possession of the property until the life tenant dies, yet they have an interest in the property. The life tenant is not allowed to do certain things, like take out a mortgage or sell the property, without the consent of the remainderman.

The remainderman must agree to any changes in any person or persons named as other remainderman. If there’s more than one, which happens when there’s more than one adult child, for instance, all of the remaindermen must agree, before any names on the life estate can be removed or changed.

If one of the remainderman becomes heavily indebted, has a contentious divorce, or is sued for a considerable sum, their share of the property could be lost to creditors, ex-spouses, or adversaries. In that case, removing the problematic remainderman could protect the value of the home.

Most life estates are irrevocable, and the laws concerning life estates vary by state.

One way to work around the need for remainderman approval, is to use a Testamentary Power of Appointment, a clause in a will permitting the life tenant to change the person to whom the property will be left upon death. Invoking the Power of Appointment doesn’t make the life estate invalid, so the tenant is still constrained from selling the property or taking any other actions without permission from the remaindermen.

The testamentary power of appointment does give the life tenant some negotiating muscle but must be built into the documents from the start.

Another trust used in this situation is the Nominee Realty Trust. This is a revocable trust holding legal title to real estate. A property owner files a new deed transferring ownership to the nominee realty trust. The trust specifies who receives the property after the owner’s death. The grantor of the nominee trust can direct the actions of the trustee, so the life tenant has the legal ability to tell the trustee to change the names of the remaindermen. This flexibility may be desirable when the children are problematic. This has to be set up when the life estate is first established.

There are occasions when the remainderman wants to terminate the interest of the life tenant. This is actually easier than removing or changing the remainderman but requires the life tenant to do something particularly egregious or illegal. The life tenant has certain rights: to rent out the property, to change or improve the property—as long as the property is being improved. The life tenant is responsible for paying taxes, maintaining the property and avoiding any liens being placed on the property.

If the life tenant does not fulfill their responsibilities or allows the property to lose value, it may be possible for the remainderman to have the life tenant’s interest terminated. However, that depends upon the provisions in the life estate. This option should be discussed and planned for when the life estate is created. This can be a complicated – and delicate – process. Make sure you have an understanding of how a life estate works when you consider using it to protect your family’s interest in your home. If you would like to learn more about life estates, and other ways of transferring ownership of property, please visit our previous posts.

Reference: Yahoo! Finance (Dec. 16, 2021) “How to Remove Someone from a Life Estate”

Avoid Password Problems in Estate Planning

January 11, 2022

Barron’s recent article entitled “How to Ensure Heirs Avoid a Password-Protected Nightmare” explains that even financial planners may not consider until too late, how difficult it can be to recover and access a loved one’s accounts after they pass away. Since we are much more paperless with our finances, getting access to these accounts can be extremely hard for heirs, if they don’t have the right information. That’s because digital accounts are protected by encryption, multifactor authentication and federal data privacy laws. There are ways to avoid password problems in your estate planning.

Create a list of digital accounts and instructions on how to access them. The list should include not only financial assets but social media and other accounts. Digital accounts that loved ones or advisors may need to access following a death include:

Traditional financial accounts
Cryptocurrency accounts
Home payment and utilities accounts
Health insurance benefits
Email accounts
Social media
Smartphone accounts
Storage and file-sharing
Photo, music and video accounts
E-commerce accounts
Subscriptions to streaming services, such as Netflix, newspapers, music services; and
Loyalty/rewards programs for airlines and hotels.

Create a list of accounts, passwords and access information, keeping it up to date as information changes and letting a trusted person, such as an executor or estate planning attorney, know its location. Without a password list, it can be a nightmare.

Note that with every digital account, there’s a specific process that heirs must undertake to gain access, which should then be communicated clearly in your estate plan. Make a list of all digital assets and their access information, but don’t include this in the will itself, since the document is part of the public record in probate.

Being prepared well ahead of time in your estate planning can help your family avoid password problems that may cause undue stress and delays as they probate your estate. It also ensures that they don’t forfeit significant financial assets concealed behind an impenetrable digital wall. If you would like to read more about protecting digital assets, please visit our previous posts.

Reference: Barron’s (Dec. 15, 2021) “How to Ensure Heirs Avoid a Password-Protected Nightmare”

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Young Adults should have a Will

January 10, 2022

Young adults should have a will. Millennials are starting to get their affairs in order, contacting estate planning attorneys because they are concerned about dying unexpectedly. A study by Caring.com, a senior referral service, said that almost a third of young adults, ages 18—34, had a will in 2021, compared to 18% in 2019. The leap, according to a recent article in The Wall Street Journal titled “Millennials, Feeling Their Mortality During Covid-19, Start Writing Their Wills” can be directly attributed to the Covid-19 pandemic.

The concern over continued uncertainty regarding whether the young adults themselves or their family members will become sick, and die is all too real. Millennials also haven’t experienced another event: sharply rising inflation. The general sense of unease and instability is leading young adults to make sure they have wills and healthcare proxies in place to give some sense of control in the face of an unstable world. Young adults with families are especially concerned, as new variants of Covid emerge.

Before the pandemic, young adults, even with those with children, didn’t feel the need to have an estate plan created. That’s changed.

Just under half of all Americans have a will, and people 65 and up have traditionally been more likely to have one, according to a May 2021 study by Gallup. This number has been relatively stable since about 1990.

If you die without a will, the state law determines how to distribute assets, under court supervision. The process is slower and far more costly for survivors. In many situations, not having a will can be catastrophic. If beneficiaries with special needs inherit funds outright, and not in a Supplemental Needs Trust (or a Special Needs Trust), they could lose government benefits necessary for their day-to-day lives.

Wills are also used to name a guardian to care for minor children. If both parents die and there is no will, a court will decide who should raise a child. The court may not necessarily name a family member, and the person may not be who the parents or grandparents might have wished.

Similarly, news about millennial celebrities dying unexpectedly also pushes the “go” button for millennials to get their wills completed. When Los Angeles Angels pitcher Tyler Skaggs died of a fentanyl overdose in 2019, calls to estate planning attorneys from millennial males increased in many law offices. At the same time, millennials who are aware of the importance of a will for themselves and their families are pressing their parents to get their wills prepared or updated.

In every case, having a will is far less costly than not having a will. The cost of preparing a will depends on many factors: the size of the estate, the complexity of the family situation, the nature of assets and where the will is being prepared. Other documents are necessary. For example, every adult should have a power of attorney, health care proxy, living will and possibly a trust.

Even young adults should take the time to draft a will. The last gift you leave your heirs is a plan and organized documents, so they can grieve properly after you pass, rather than having to embark on a scavenger hunt through decades of paperwork and old files. If you would like to learn more about estate planning for young adults, please visit our previous posts.

Reference: The Wall Street Journal (Dec. 6, 2021) “Millennials, Feeling Their Mortality During Covid-19, Start Writing Their Wills”

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Naming Beneficiaries is Vital to Your Planning

January 7, 2022

Naming beneficiaries is vital to your planning. For the loved ones of people who neglect to update the beneficiaries on their estate plan and assets with the option of naming beneficiaries, the cost in time, money and emotional stress is quite high, says the recent article “Five Mistakes To Avoid When Naming Beneficiaries” from The Chattanoogan.

The biggest mistake is failing to name a beneficiary on all of your accounts, including retirement, investment and bank accounts as well as insurance policies. What happens if you fail to name a beneficiary? Assets in the accounts and proceeds from life insurance policies will automatically become part of your estate.

Any planning you’ve done with your estate planning attorney to avoid probate will be undercut by having all of these assets go through probate. Beneficiaries may not see their inheritance for months, versus receiving access to the assets much sooner. It’s even worse for retirement accounts like IRAs. Any ability your heir might have had to withdraw assets over time will be lost.

Next is forgetting to name a contingency beneficiary. Most people name their spouse, an adult child, or a sibling as their primary beneficiary. However, if the primary beneficiary should predecease you and there is no contingency beneficiary, it is as if you didn’t have a beneficiary at all.

Having a contingency beneficiary has another benefit: the primary beneficiary has the option to execute a qualified disclaimer, so some assets may be passed along to the next-in-line heir. Let’s say your spouse doesn’t need the money or doesn’t want to take it because of tax implications. Someone else in the family can more easily receive the assets.

Naming beneficiaries without taking care to use their proper legal name or identify the person with specificity has led to more surprises than you can imagine. If there are three generations of Geoffrey Paddingtons in the family and the only name on the document is Geoffrey Paddington, who will receive the inheritance? Use the person’s full name, their relationship to you (“child,” “cousin,” etc.) and if the document requires a Social Security number for identification, use it.

When was the last time you reviewed beneficiary documents? The only time many people look at these documents is when they open the account, start a new job, or buy an insurance policy. Every few years, around the same time you review your estate plan, you should gather all of your financial and insurance documents and make sure the same people named two decades ago are still the ones you want to receive your assets on death.

Finally, talk with loved ones about your legacy and your wishes. Let them know that an estate plan exists and you’ve given time and thought to what you want to happen when you die. There’s no need to give exact amounts. However, a bird’s eye view of your plan will help establish expectations.

Naming beneficiaries in your estate planning is vital to a sound plan. If naming beneficiaries is challenging because of a complex situation, your estate planning attorney will be able to help as a sounding board or with estate planning strategies to accomplish your goals. If you would like to learn more about beneficiary designations, please visit our previous posts.

Reference: The Chattanoogan (Dec. 6, 2021) “Five Mistakes To Avoid When Naming Beneficiaries”

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Trust provides more Protection than TOD

January 6, 2022

Many people incorporate a TOD, or “Transfer on Death” into their financial plan, thinking it will be easier for their loved ones than creating a trust. However, a trust provides more protection than a TOD. The article “TOD Accounts Versus Revocable Trusts—Which Is Better?” from Kiplinger explains how it really works.

The TOD account allows the account owner to name a beneficiary on an account who receives funds when the account owner dies. The TOD is often used for stocks, brokerage accounts, bonds and other non-retirement accounts. A POD, or “Payable on Death,” account is usually used for bank assets—cash.

The chief goal of a TOD or POD is to avoid probate. The beneficiaries receive assets directly, bypassing probate, keeping the assets out of the estate and transferring them faster than through probate. The beneficiary contacts the financial institution with an original death certificate and proof of identity. The assets are then distributed to the beneficiary. Banks and financial institutions can be a bit exacting about determining identity, but most people have the needed documents.

There are pitfalls. For one thing, the executor of the estate may be empowered by law to seek contributions from POD and TOD beneficiaries to pay for the expenses of administering an estate, estate and final income taxes and any debts or liabilities of the estate. If the beneficiaries do not contribute voluntarily, the executor (or estate administrator) may file a lawsuit against them, holding them personally responsible, to get their contributions.

If the beneficiary has already spent the money, or they are involved in a lawsuit or divorce, turning over the TOD or POD assets may get complicated. Other personal assets may be attached to make up for a shortfall.

If the beneficiary is receiving means-tested government benefits, as in the case of an individual with special needs, the TOD or POD assets may put their eligibility for those benefits at risk.

These and other complications make using a POD or TOD arrangement riskier than expected.

A trust provides a great deal more protection for the person creating the trust (grantor) and their beneficiaries than a TOD. If the grantor becomes incapacitated, trustees will be in place to manage assets for the grantor’s benefit. With a TOD or POD, a Power of Attorney would be needed to allow the other person to control of the assets. The same banks reluctant to hand over a POD/TOD are even more strict about Powers of Attorney, even denying POAs, if they feel the forms are out-of-date or don’t have the state’s required language.

Creating a trust with an experienced estate planning attorney allows you to plan for yourself and your beneficiaries. You can plan for incapacity and plan for the assets in your trust to be used as you wish. If you want your adult children to receive a certain amount of money at certain ages or stages of their lives, a trust can be created to do so. You can also leave money for multiple generations, protecting it from probate and taxes, while building a legacy. If you would like to read more about a TOD or POD, and how they work, please visit our previous posts.

Reference: Kiplinger (Dec. 2, 2021) “TOD Accounts Versus Revocable Trusts—Which Is Better?”

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What Happens to HSA when Owner Dies?

January 5, 2022

An HSA, or Health Savings Account, can be an excellent way to save for medical expenses. For wage earners with high-deductible HSA-eligible health insurance plans, the IRS allows generous contributions on a pre-tax basis to an HSA ($3,600 per year for individuals, $7,200 per year for a family plan as of 2021), according to the article “HSAs and Estate Planning” from The Street. The money can be withdrawn, including both principal and earnings, with no taxes, as long as the withdrawals are used for qualified medical expenses. Here’s a look at what happens to an HSA when the owner dies.

Seems like a no brainer, doesn’t it? This unique account allows for triple-tax savings. However, when Health Savings Accounts become large, savvy planning is needed to understand how they work in estate planning and taxes.

The inherited HSA becomes the surviving spouse’s HSA, if the spouse had been designated as the beneficiary on the HSA. The money remains in the HSA and the spouse’s name is added to the account. They may make tax-free distributions from the HSA to pay for their own qualified medical expenses, as if they were the original owner. The HSA is not included in the estate, since it has become the property of the surviving spouse.

What if a non-spouse is the designated beneficiary? Upon the death of the original owner, the HSA is no longer considered an HSA for tax purposes. An immediate and taxable distribution of the entire amount goes to the non-spouse beneficiary. The beneficiary must include the HSA balance in their taxable income in the year of the original owner’s death.

The normal 20% penalty applying to distributions for non-qualified medical expenses doesn’t apply. The beneficiary pays income taxes at their marginal tax rate on the full amount of the HSA balance. However, at least there are no penalties.

However, any portion of an inherited HSA balance used to pay for outstanding medical expenses of the account owner within one year of the date of death (DOD) is not taxable to the non-spouse beneficiary. In this case, the HSA is also not included in the estate, since it is fully taxed to the non-spouse beneficiary on their own individual tax return.

If the Health Savings Account owner designates their estate as the beneficiary when they die, the account balance is included in the owner’s gross income for the year of their death. The HSA is still not included in the estate and is treated as income for the last year of their life, when it is reported as income on the final tax return.

A charity may be listed as a beneficiary for a has. Any charity will receive the full amount of the HSA with no taxes or penalties.

For most people, it’s best to use the HSA as you need it. Once you reach age 65, you are no longer subject to the 20% penalty for withdrawals not spent on medical expenses. If you have a sizable HSA, talk with your estate planning attorney on how to efficiently use it, while living and for other beneficiaries after you have died. If you would like to learn more about what happens to accounts such as an HSA when the owner dies, please visit our previous posts.

Reference: The Street (Dec. 9, 2021) “HSAs and Estate Planning”

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Non-Grantor Trusts can be Useful

January 4, 2022

Yahoo News’ recent article entitled “How a Non-Grantor Trust Works” says that a grantor trust lets the grantor (the person creating the trust) maintain certain powers of the trust. No matter the scope of the powers involved, what’s unique about grantor trusts is their tax treatment—the trust grantor is responsible for paying income tax on the trust assets. Any income the trust generates or receives is taxable to the grantor, who reports it on their personal tax return. Non-Grantor Trusts can be useful in a number of situations.

A non-grantor trust is any trust that isn’t a grantor trust. As a result, they can’t revoke or change the terms of the trust or make changes to trust beneficiaries. This lack of control means that a non-grantor trust is treated as a separate tax entity. Therefore, the trust itself must pay taxes on any income that’s received and file a tax return. A non-grantor trust can offer certain tax benefits to the trust grantor: (i) the grantor wouldn’t have to pay tax on the trust income, which may be a benefit where the grantor prefers to assume no further financial responsibility for the trust or its assets; and (ii) there can be positive tax implications, if the trust beneficiaries are in a lower tax bracket than the grantor. When trust income is distributed to beneficiaries in a lower tax bracket, it may be taxed at a lower rate than it would if the grantor were being taxed.

Ask an experienced estate planning attorney about a non-grantor trust if you run a business, since the Qualified Business Income (QBI) deduction lets eligible taxpayers deduct up to 20% of qualified business income, as well as 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. If you own a business, and your income is above the allowed threshold to qualify for the QBI deduction, you could create a non-grantor trust as a work-around and divide the ownership of your business assets and its associated income. This may let you qualify for the QBI deduction.

However, there are some potential drawbacks with non-grantor trusts. Remember, the trust grantor lacks control of what happens with trust assets. It is also important to consider how any transactions between you as the grantor and the trust may be taxed. Certain interactions, including the movement of assets or income between the two, is taxable because you and the trust are two separate entities, which may mean taxes for one or the other.

In addition, an incomplete non-grantor (ING) trust is a type of trust that’s used for asset protection. It’s frequently used by those who live in states with high income tax rates or no state income tax. If you live in a state with high income tax rates, you could create an incomplete non-grantor trust and fund it using appreciated assets that have a low tax basis. If the trust is created in a state that has lower income tax rates or no state income tax, it may reduce the grantor’s tax bill when later selling those assets.

Incomplete non-grantor trusts can also allow you to transfer ownership of assets to the trust without paying gift tax. There are also the other tax benefits associated with non-grantor trusts.

Non-grantor trusts can be useful in a variety of circumstances. Ask an experienced estate planning attorney if one would be useful for your tax and estate planning situation. If you would like to learn more about trusts, please visit our previous posts.

Reference: Yahoo News (Nov. 9, 2021) “How a Non-Grantor Trust Works”

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Costs of Long-Term Care can be Challenging

December 30, 2021

The potential costs of long-term care be challenging for even a relatively prosperous patient if they are forced to stay for some time in a nursing home. SGE’s recent article entitled “How to Pay for Long-Term Care” explains that although long-term care insurance can be a good way to pay for long-term care costs, not everyone can buy a policy. Insurance companies won’t sell coverage to people already in long-term care or having trouble with activities of daily living. They may also refuse coverage, if you have had a stroke or been diagnosed with dementia, cancer, AIDS or Parkinson’s Disease. Even healthy people over 85 may not be able to get long-term care coverage.

However, there are a number of options for covering these expenses, including the following:

Federal and state governments. While the federal government’s health insurance plan doesn’t cover most long-term care costs, it would pay for up to 100 days in a nursing home if patients required skilled services and rehabilitative care. Skilled home health or other skilled in-home service may also be covered by Medicare. State programs will also pay for long-term care services for people whose incomes are below a certain level and meet other requirements.
Private health insurance. Employer-sponsored health plans and other private health insurance will cover some long-term care costs, such as shorter-term, medically necessary skilled care.
Long-term care insurance. Private long-term care insurance policies can cover many of the costs of long-term care.
Private savings. Older adults who require long-term care that’s not covered by government programs and who don’t have long-term care insurance can use money from their retirement accounts, personal savings, brokerage accounts and other sources.
Health savings accounts. Money in these tax-advantaged savings can be withdrawn tax-free to pay for qualifying medical expenses, such as long-term care. However, only those in high-deductible health plans can put money into health savings accounts.
Home equity loans. Many older adults have paid off their mortgages or have a lot of equity in their homes. A home equity loan is a way to tap this value to pay for long-term care.
Reverse mortgage. This allows a homeowner to get what amounts to a home equity loan without paying interest or principal on the loans while they’re alive. When the homeowner dies or moves out, the entire balance of the loan becomes due. The lender usually takes ownership.
Life insurance. Asset-based long-term care insurance is a whole life insurance policy that permits the policyholder to use the death benefits to pay for long-term care. Life insurance policies can also be purchased with a long-term care rider as a secondary benefit.
Hybrid insurance policies. Some long-term care insurance policies are designed annuities. With a single premium payment, the insurer provides benefits that can be used for long-term care. You can also buy a deferred long-term care annuity that’s specially designed to cover these costs. Some permanent life insurance policies also have long-term care riders.

While the costs of long-term care can be challenging, most people will not face extremely burdensome long-term care costs because nursing home stays tend to be short, since statistics show that most people died within six months of entering a nursing home. Moreover, the vast majority of elder adults aren’t in nursing homes, and many never go into them. If you would like to learn more about long-term care, please visit our previous posts.

Reference: SGE (Dec. 4, 2021) “How to Pay for Long-Term Care”

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Blog Articles

What are Home Caregiving Options for Parents?

Ways to Avoid a Succession Fight

Understanding how a Life Estate works

Avoid Password Problems in Estate Planning

Young Adults should have a Will

Naming Beneficiaries is Vital to Your Planning

Trust provides more Protection than TOD

What Happens to HSA when Owner Dies?

Non-Grantor Trusts can be Useful

Costs of Long-Term Care can be Challenging

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