With rising life expectancies and healthcare costs, it’s no surprise that many Americans will need long term care (home health care, assisted living, nursing home, etc.) at some point in their lives. That’s why it’s so important to consider long term care when doing estate planning.
The biggest misconception about long term care is that it’s something only the elderly need. Younger adults can end up needing long term care due to injury or illness, so it’s important to plan for the possibility now. Another misconception is that health insurance covers long term care costs. If you’re lucky, your health insurance will cover some of the costs immediately after you get sick or injured, but after that you’re on your own.
There are two main things you can do as part of your estate plan to minimize the problems associated with long term care. First, consider purchasing long term care insurance. For a relatively small premium, you can protect yourself against the high costs of long term care should you need it.
Secondly, consider creating a trust. With a trust, you can name someone to take over managing your assets if you become incapacitated due to injury or illness. The transition happens automatically. That person can then use the assets in the trust to cover the costs of long term care. In the meantime, you continue to manage your own assets as you normally would.
Estate planning requires planning for the unexpected. For many, needing long term care is an unexpected and costly situation to find themselves in. But with a little advanced planning, you can make sure it doesn’t derail your estate planning goals.