Long-term care is expensive, whether you provide the care yourself, have care givers come into the home or use a care facility. If you have no assets, no savings and nothing of real dollar-sign value, and your income is not enough to pay for long-term care, the government has a plan for you — Medicaid. That is a topic for another time, but if Medicaid appears to fit your circumstances, be sure to use an expert to complete the application. For now, let’s look at just a few more creative methods for covering this cost.
• Hire a family member
To hire a family member to provide your care, you need an attorney and CPA to create proper contracts and address tax issues. Basically, you will sign over an agreed-upon amount from the estate each year to the caregiver. At your passing, those dollars get paid out of any remaining estate. The family member can’t collect beyond the total value of the estate. Make certain all family members understand this.
Purchase a large life insurance policy to replace what you spend on long-term care. If you are not easily insurable, you can find someone close to your age who is insurable and purchase a policy on them as a surrogate. If you pass early, your heirs have more. The heirs may need to continue to pay the premium after your passing until your surrogate passes. Again, work with experts. This is definitely not a do-it-yourself method.
Using a reverse mortgage may be a good option if you are planning to stay in your home long-term. A reverse is used like a line of credit — you may pull out tax-free funds to pay for care. A reverse mortgage offers many benefits. But getting good advice from a licensed and experienced reverse mortgage loan officer is a must.
• Stand-alone plan
A stand-alone, long-term care insurance plan is the cleanest way to protect your estate. But if you can’t have that — these are other solutions.
Work with a professional who really understands long-term care planning.