Tips on planning proactively for long-term care

It's nearly impossible to predict what level of long-term care you or a loved one will eventually need. But as aging takes its natural course, certain health conditions, lifestyles and extenuating circumstances make long-term care a necessity for many individuals.

For some, that care might be as minimal as having an aid come over and help out with cooking and cleaning in the home. For others, however, they may need to move into a senior living community or receive full-time personal care.

Planning early can help alleviate some of the stress and financial concerns that come with long-term care.

"As soon as possible, start thinking about it, especially with the consideration of your financial planning. Many of my clients in their late 50s and 60s are asking, 'Can I retire when I want to? Do I have enough to retire?'" said Lauren Maxie, attorney and partner at NC Planning, a Raleigh-based estate planning firm. "That is where a financial advisor gets involved. For us, we really start with people in their 50s. Often just talking about this, looking at their financial plan and if they have enough money to pay for care, then also asking what that looks like for them. Is it paying for care in the home, or paying for care in a community?"

For Maxie, the sooner these conversations happen the better. Pre-planning from a financial perspective allows more options down the road, especially since most people won't know what level of care will be needed.

Since no one can predict what medical or personal issues will arise in the future, planning at least five years ahead can provide a safety blanket if a worst-case scenario were to come up.

"A very common concern we hear is people worrying if they have a long-term care event and all the money is spent on them, what's going to happen to their spouse? If you plan proactively, you can do advanced giving strategies with an asset protection trust, and that is a very common tool in the toolbox," said Maxie. "You can transfer assets out of your name, and you do lose some control over those assets, but the big benefit is, once they're out of your name for that period of time, depending on what type of care you're seeking then essentially they're no longer your assets — so it's not a countable resource when you go to apply for these needs-based programs. "

"You have the assets out of your name for three or five years, so doing that proactively lets you essentially get your net worth down while you're not in crisis mode," she finished. "You can maximize on those benefits when it's appropriate."

Because of the way Medicaid operates, many people find that they have too high of an income or net worth to qualify — even if they're in need of financial help for long-term care. Through this strategy, people who might not have been eligible for Medicaid or Veterans Pension may be able to qualify. Again, planning ahead is key, since assets will need to be out of an individual's name for a certain amount of time before they're able to qualify.

An experienced elder law attorney can evaluate your income and net worth and create wills, trusts, estate plans and more to alleviate some of the financial stress of planning. Since people's situations are always changing, creating a long-term plan is always evolving, and establishing a relationship with an attorney builds important familiarity in creating that strategy.

"I worked with a couple and the husband had an early onset of Alzheimer's. He was in his early 60s, but he needed advanced care. But they only had about $400,000 of liquid assets," said Maxie. "They had their house and other things sitting there, but we knew they were going to run out of money for care since it can be so expensive. By doing some advanced planning, we were able to save for his spouse and make sure she had enough to age the way she desired while enabling him to qualify for governmental benefits sooner without having to spend everything down on care for him."

Maxie also recommends having these important discussions with your attorney and your family to start planning, especially while you're still young — not just for yourself, but also for your loved ones.

"You don't want your family guessing on what your wishes are. What can we do to communicate on the emotional wishes and desires side, but also looking from the financial side of what can we do with the structure of your assets? What are some of the legal tools in the toolbox that we could start right now? Then we can set us up for success there," said Moxie. "What we talk a lot about with clients is just opening up a conversation with your family and saying, 'If something happens, here's what my wishes are.' There's so much emotion and sometimes guilt around those decisions of when to move someone or where, and if you are able to have that conversation proactively you can really avoid some of those issues."