What Should I Do to Plan For Long-Term Care? - Part 1

What can be done to plan for long-term care, ensure that a health crisis or chronic illness will not erode an individual's security and dignity, and provide for family and loved ones?

As you may have already gathered, the answer is not simple. A careful analysis of each individual's personal and financial situation must be done to formulate the proper plan. Factors such as income from social security, pensions and investments; the nature and value of assets; age and health; family situation; and other considerations must be evaluated in order to make the right choices.

If long-term care insurance is not an option, and personal income and resources are not sufficient, one planning technique is to transfer assets into an “Asset Protection” Trust, retaining the income for the “Grantor” and preserving the principal of the assets (the assets held by the Trustee) for spouses, children or other beneficiaries. When properly drafted, the trust will provide asset protection, with significant tax benefits as well, including avoidance of gift taxes, and elimination of capital gains taxes.

In addition, trust assets will avoid probate. The trust allows the Trustee to access the principal of the trust during the Grantor's lifetime for the benefit of the Grantor’s children or other beneficiaries, although the Trustee cannot give the principal directly to the Grantor. Most Grantors also choose to maintain the right (called a Special Power of Appointment) to change the ultimate beneficiaries of the trust, by “reappointing” the assets to different family members at a later date. This power retains control for the Grantor, and prevents transfers to the trust from being treated as taxable gifts

What Should I Do to Plan For Long-Term Care? - Part 2

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The information in this blog is not intended to be, nor should it be, construed as legal advice. It is for informational purposes only. For advice, specific to your situation, consult with a qualified attorney