Elder Planning: What Is It and When Do You Need It?


Elder planning is legal planning for your long-term care needs and the costs associated with the care. Nursing homes today cost over $100,000 a year, and the figures rise annually faster than inflation. At such a high cost, nursing home care can easily wipe out a modest estate before one must utilize Medicaid (without any planning, you would have to spend down close to everything you own).  

There are two types of elder planning: Advanced planning and crisis planning. Advanced planning can help shield some significant assets from being spent down on a nursing home, while still allowing qualification for Medicaid. This involves use of irrevocable trusts. The best assets to preserve with trusts are typically second homes or investment accounts that you will never need.

Other options for advanced planning include the purchase of life insurance, with a death benefit that can be used for long-term care costs. This is typically a win-win situation for clients that can get covered and are comfortable paying the premiums.

Advanced planning is great for those that have certain assets or money to plan with and also want to ensure their family is left an inheritance.

On the other hand, crisis planning occurs immediately before the individual is admitted to a nursing home. Sometimes, some assets can be preserved, but the options are usually limited and costly.

If you want to plan in advance, the optimal time is typically in your 60’s while you’re still in good health. Adjust the age based on your health history, family health history and other factors. Also, planning is best done for clients with estates valued at between $500,000 and $1,500.000. Anything below or above those numbers usually makes advanced planning less urgent.

For more questions about elder planning, please contact me at jeremy@jawatlaw.com.