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The Heritage Law Center, LLC Blog

Living Longer Without Paying More

POSTED ON: September 29, 2014

The life expectancy rate in America has never been higher and celebrating your 80th, 90th, or even 100th birthday is becoming increasingly likely. But with a longer life comes an increased need for services, including long-term care. Providing long-term care places an enormous emotional and physical strain on your loved ones. However, by planning ahead you can ensure that your family will be able to care about you, and not for you, for as long as you need.

The US Department of Health and Human Services estimates that 70% of people who reach age 65 will require long-term care services at some point in their lives. 17% of seniors will need care for less than one year, 12% for 1-2 years, 20% for 2-5 years and 20% for more than 5 years.

With this increased need for care comes an increased cost. Paying out of pocket for long-term care services in Massachusetts routinely tops over $120,000 per year, and the cost of care is only rising. Double that for a couple, project for five years and you are already over $1million in care costs.

Qualifying for MassHealth, which helps pay for long term care in Massachusetts, is one of the largest benefits of using an irrevocable trust as part of your estate plan. When assets are transferred to an irrevocable trust they can be legally sheltered from long-term care costs, allowing the owner to qualify for MassHealth. Assets transferred to an irrevocable trust can still be used by the owner. An owner of a house, for example, once transferred to an irrevocable trust, would still live in the house and pay their bills as they do currently. They could also rent out or sell the house and use the proceeds to purchase a new house.

Crucial to this type of planning is understanding MassHealth’s five year look-back period. If a transfer of assets occurs within five years of applying for benefits, a period of disqualification may be imposed. This makes planning well before a person actually requires MassHealth eligibility extremely important.

It sounds scary, but the fact is that by planning ahead you can protect your home and other hard-earned assets from a potentially devastating financial event. When should you start planning? Well, you will never be younger or healthier than you are today. Waiting until care is actually needed usually means it is too late for many estate planning options.