What strategies are there for keeping assets from being used for nursing care expenses from one's estate?
There are a host of strategies. The rules differ by state and circumstances can affect planning, so we'll give you some answers but the only safe bet is to consult an elder law attorney and financial planner:
- Give away assets to start tolling time before you can qualify for governmental programs and not have the assets reached. There are lots of ways to give away assets and that will depend on the circumstances you face. If you have close children you trust implicitly you may opt to give them assets directly, otherwise more complex strategies must be pursued. Giving assets away is not always so simple as you should consider the imptact of income taxes as well. For example, you might gift a life estate in your home to a child so that the asset may qualify as protected from nursing home costs, but will be included in your estate for tax purposes and thus receive a step up (increase) in tax basis on your death. This approach might safeguard the asset yet preserve an important income tax benefit for your children or other heirs.
- Purchase long term care insurance to fund the cost of nursing home or home health care.
- Safe and self fund the costs if your estate is large enough. In some instances this can be a better option than insurance. It depends on the facts.