Long-Term-Care Policies and Financial Planning
It may be too late to consider a long-term-care policy for your parents, but it is the right time to consider one for yourself and your spouse. The younger you are and the healthier you are when you buy into the policy, the better the rate you will get.
As more and more people begin to buy these policies, the rates will go down, but don't wait for that to happen unless you have the finances to pay for custodial care and five years in a nursing home.
Advance planning is required if you have many assets, property, and money you want to protect and be able to pass on to your children. Otherwise, as you have probably seen with your parents, these assets will be used to help pay for your care.
A long-term-care policy will not cover all expenses, but it should be sufficient to pay enough to make the expenses affordable for your parents or you and your siblings to pay for. One of the most important factors to look for in a policy is an inflation factor. Today's dollars will not cover costs in tomorrow's financial world.
If you have significant assets, you may need to discuss the best way to protect them with an attorney or financial planner. How much is reasonable to keep you and your spouse comfortable as you age, and how much do you want to pass on to your children?
Perhaps it would be advisable to begin to make gifts now or in the next few years so that your children can make their own investments or so you are able to enjoy watching them using or spending these funds to buy their own homes.
Spending down to become eligible for Medicaid or gifting assets or money to your children to reduce taxes needs to be done over a period of time and well in advance of your application for Medicaid or for other purposes such as inheritance taxes. Learn from your experiences with your parents and in-laws. For example, entering into joint tenancy with your children on your home should be done so they aren't penalized with taxes.
A living trust may be what your financial advisor suggests, but timing can be critical to avoid excessive taxes for your heirs. This may be something to do now rather than waiting even a few years.
Just as you began to plan for your retirement years ago with IRAs and 401(k)s, now is the time to begin to plan for your old age. Consult with an attorney or financial planner to set up a plan that benefits you as well as your heirs.