Many years ago, planning for the future meant retirement and estate planning. In recent years, planning for the future has taken on new meaning. It now includes planning for long term care. This change in society is a result of an aging population Living beyond normal retirement age as a result of advanced medical care, better nutrition, and increased exercise. In order to address the needs of this new paradigm, families need to consider the cost of long term care and how they are going to pay for it.
There are three distinct ways of paying for long term care. The first is a person’s own savings. This solution only works if a person has substantial assets, typically a million dollars or more. The second way of paying for long term care is long term care insurance. This is a good solution if a person can qualify for a comprehensive policy and is able to pay the premiums. The last way to pay for future long term care expenses is public benefits. The most common public benefits are Medicaid and Improved Pension with Aid and Attendance for Veterans. However, a person has to have served in the military during specific wartime years, as well as fulfilling other requirements, before the veteran, or the spouse of a deceased veteran, can qualify for that benefit. Medicaid is the largest provider of long term care funds for those who are indigent. While Florida currently permits certain types of Medicaid Planning on an emergency basis, there is no guarantee that the laws will remain the same in the future, and this could create a large problem for those individuals who do not plan ahead.
So, how should a person plan for an aging parent? Accumulating a large savings is one way to pay for future long term care, but most children have very little control over that. Long Term Care Insurance might be the solution if the parent can qualify and afford the policy.
An alternative to emergency planning or purchasing long term care insurance is to consider a “5-Year Trust.” This type of planning recognizes an aging parent’s declining chronic condition and plans for the eventuality of long term care by creating a trust to protect the parent’s assets, if Medicaid is needed to pay for that care. Although there are many issues to be considered, an experienced elder law attorney can guide the family through each issue so that the final trust document and related planning addresses the parent’s specific needs. Some of those issues include whether or not to make the trust an “income only” trust, requiring income to be distributed to the parent, and whether or not to transfer “Homestead” property into the trust. The answers to these and other issues require careful analysis before making a decision.
In conclusion, if crisis Medicaid planning is not an appealing option, and long term care insurance is too expensive or cannot be purchased, the “5-Year Trust” may be the right solution to planning for long term care.
For more information about the “5-Year Trust,” or other solutions to planning for long term care, call our Miami Elder Law Center for a FREE telephone consultation.