The point of estate planning is to create a stable and predictable method of distributing your property when you pass away, while maximizing the amount that your heirs ultimately receive. People work closely with their attorneys to meticulously create their plans, which can involve any variety of gifting, wills, and trusts. However, one aspect of planning that can throw a wrench into the works is the expense of long-term care as one ages. This becomes a more salient possibility as life expectancies increase.
Beyond the emotional toll and pain that comes with watching a loved one age or suffer from disability comes the financial realities of paying for quality long-term medical care. Home health care, nursing homes, and assisted living centers can be exorbitantly expensive. The average cost of a nursing home in Illinois is currently $178 per day, and could be significantly higher based on geographic location, the person’s medical needs, and the quality of the facility. This doesn’t even factor in the costs of additional medical treatment. If a family ends up paying for long-term care out of pocket, there is potential to shrink a sizeable share of the person’s (or married couple’s) estate. This leaves the person’s heirs with little to none of what was intended.
Even worse, some states have filial responsibility laws. These are laws that allow health care providers for the elderly to hold their patients’ children financially responsible for medical bills they cannot collect from the patients themselves. So not only could an estate be depleted, but a person’s spouse and children can be left saddled with debt. This burden completely defies what parents want for their loved ones. Fortunately, Illinois does not currently have such laws in place. However, other states surrounding Illinois do, which families should be wary of if they seek care outside of this state.
Planning for Long Term Care
There are options for planning the financial reality of long-term care, which may include some combination of:
- Medicare, which does not operate as a long-term care solution. Instead, for people 65 years or older, it may qualify a person for up to 100 days of rehabilitative nursing home coverage. For eligible persons, Medicare will entirely pay for the first 20 days of this nursing home stay, then will pay a percentage of the remaining 100 days.
- Long Term Care (LTC) insurance. This is an underutilized tool that is specifically designed to ease the financial burden of long-term supportive services for individuals and families. This is essentially an insurance policy that will pay for future costs of care associated with assisted living, home health care, or nursing home care. People can, and should, pay into LTC insurance before the age of fifty in order to build enough to maximize their coverage.
- Medicaid is among the most common ways that people pay for long term care. However, there are strict financial and medical eligibility requirements to qualify. The financial eligibility requirements look at income and assets, and are likely prohibitive for people with wealth, or people who want their spouse to maintain their lifestyle.
- Irrevocable Life Insurance Trust (ILIT). While an ILIT is most commonly used as a trust that receives and shields life insurance benefits from estate taxes, it can be tailored to receive LTC indemnity benefits. The benefit of this is that a trustee can use these proceeds to pay creditors, distribute money to heirs, or loan the money back to the beneficiary and become a creditor of the estate. An ILIT that serves this purpose must be carefully and legally crafted.
Contact an Experienced Attorney for Assistance
Arranging and accounting for long term care should be a critical aspect of estate planning. The last thing you want to do is leave your spouse or heirs with nothing. At worst, you do not want to leave them in personal debt. Contact The Law Offices of Robert S. Thomas for legal guidance. Estate planning is a complex process, and it is important to hire an attorney who can provide you with effective, relevant legal options to fulfill your goals. As an attorney with over twenty years of estate planning experience, I can help you. Contact The Law Offices of Robert S. Thomas at 847-392-5893 to schedule an appointment or visit our website today.