Planning for Long-Term Care: Protecting Your Assets and Ensuring Your Future Care
As life expectancy rates in the U.S. continue to rise, more people are celebrating milestone birthdays—80th, 90th, even 100th birthdays. However, with a longer life comes the reality of needing long-term care services. Planning ahead for these needs can help ease the emotional and physical strain on your loved ones and ensure they can care about you, not for you, as you age.
The Growing Need for Long-Term Care
The U.S. Department of Health and Human Services estimates that 70% of people who reach age 65 will require some form of long-term care in their lifetime. Here’s how long-term care needs typically break down:
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17% of seniors will need care for less than one year.
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12% will need care for 1-2 years.
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20% will require care for 2-5 years.
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20% will need care for more than 5 years.
This increasing need for care brings with it a growing cost, with long-term care services in Massachusetts averaging over $120,000 per year. For couples, the cost doubles, and over a five-year period, it can easily exceed $1 million.
How to Plan for Long-Term Care Costs
One of the most effective strategies for managing long-term care costs is qualifying for MassHealth, which helps cover long-term care expenses in Massachusetts. A well-structured estate plan that includes an irrevocable trust can help protect your assets from these costs and make you eligible for MassHealth assistance.
The Benefits of an Irrevocable Trust
An irrevocable trust is a powerful tool in estate planning. Here’s how it works:
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Asset Protection: When you transfer assets to an irrevocable trust, those assets are legally protected from long-term care costs. This means they won’t be counted when determining eligibility for MassHealth benefits.
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Continued Use: Even though the assets are transferred to the trust, you can still use them. For example, if you transfer your house to the trust, you can continue living in it, pay your bills as usual, and even rent or sell the property. If you sell the house, you can use the proceeds to purchase a new home.
Understanding the MassHealth Look-Back Period
A crucial factor in this type of planning is understanding MassHealth’s five-year look-back period. If assets are transferred to a trust within five years of applying for long-term care benefits, a disqualification period may be imposed. This is why it’s essential to start planning well before you actually need MassHealth assistance.
Don’t Wait: Plan Today for a Secure Future
It may feel overwhelming to think about long-term care planning, but the good news is that by planning ahead, you can protect your hard-earned assets from potentially devastating financial burdens.
The earlier you begin this process, the better. Estate planning options, particularly those involving irrevocable trusts, are often unavailable or less effective if you wait until you actually need long-term care. The best time to start planning is now—while you’re still healthy and able to make the best decisions for your future.
